Quest’s end-of-December NAV increased from € 9.09 to € 9.26 p.s, while its stock followed suit with an increase from € 5.55 to € 5.70 (38.4% discount). No new investments or divestments were made apart from upping and lowering stakes in several stocks. We reiterate our Buy rating and maintain our TP.
News:
NAV at end-December moved up to € 9.26 p.s., versus € 9.09 at end-November. The stock followed suit and ended the month at € 5.70 (2.7% m/m), due to which the discount decreased to 38.44% (end-November 2012: 38.44%).
Quest showed activity in December across all its sectors/markets. The company upped stakes in Init Innovation, Melexis and Centrotec while stakes in SAP, United Drug, Andritz, Faiveley and Umicore were lowered. Combined, the listed portfolio at current prices totals € 64.83m and accounts for 58.7% of NAV. Listed assets break down in Software & Services (11.94%), Technology & Hardware (9.54%), Pharma & Biotech (1.58%), Healthcare Equipment (12.05%), Semiconductors (2.4%), Electrical & Engineering (18.01%) and Materials & Others (3.21%).
We also took notice of the fact that Quest took over the 13.5% stake in 4Energy from KBC Privat Equity. This strikes us as rather odd as 4Energy has been in rough waters lately. We lack financial details on this deal.
The aggregated value of the direct Private Equity investments (€ 21.19m, excl. provisions) rose marginally compared to end-of-November. The total amount of provisions decreased from € 4.45m to € 2.85m (2.6% of NAV). Capital invested into various 3rd party investment funds totalled € 10.2. All PE assets are carried at € 38.4m (37.2% of NAV).
We estimate net cash at € 7.12m (2% of NAV), which includes the valuation of options and other items as well as € 2.85m of the said provisions. Commitments total € 18.19m (47% of all PE investments).
Conclusion:
Both Quest’s stock (+20.0%) and NAV (+17.2%) outperformed European equity markets (DJ EuroStoxx50: +10.9%) on a YTD-basis, but the stock’s valuation remains very undemanding nevertheless; the current 38.4% discount (based on NAV p.s. of € 9.26) remains substantial when compared to its historical average (9-year avg: 29.9%). We maintain our Buy rating and € 6.4 TP. This leaves 7.74% upside potential. Items that hold back the stock are the lack of dividend visibility and few triggers to unlock value (such as an IPO or trade sales).