Intrinsic Value Lisi S.A. (FII.PA)

• Previous Close: €53.50
• Intrinsic Value: €11.22
• Upside potential: -79%

Stock Valuation Context

Business Model And Market Position

Lisi S.A. is a specialized industrial player operating across aerospace, automotive, and medical sectors, providing high-precision assembly and component solutions. The company’s diversified portfolio includes critical fasteners, structural components, and medical implants, serving global OEMs in demanding industries. Lisi Aerospace supplies titanium nuts, LEAP engine components, and satellite antenna brackets, positioning itself as a trusted partner for aircraft manufacturers. Lisi Automotive focuses on fastening systems, braking components, and weight-optimized assemblies, catering to evolving automotive electrification trends. Lisi Medical offers trauma and orthopedic implants, surgical instruments, and reconstruction solutions, aligning with the growing demand for advanced medical devices. The company’s vertically integrated capabilities—from design to prototyping and mass production—enhance its competitive edge in niche markets. With a heritage dating back to 1777, Lisi leverages deep metallurgical expertise and long-term customer relationships to maintain its market position. Its subsidiary structure under Compagnie Industrielle De Delle S.A. provides strategic stability, while its global footprint ensures resilience against regional demand fluctuations. The company’s focus on high-margin, technically complex products mitigates commoditization risks, though it remains exposed to cyclical end-market dynamics.

Revenue Profitability And Efficiency

Lisi reported FY revenue of €1.79 billion, with net income of €56 million, reflecting a net margin of approximately 3.1%. Operating cash flow stood at €186.8 million, underscoring solid cash conversion despite capital expenditures of €106.8 million. The diluted EPS of €1.2 indicates moderate earnings power relative to its market cap, with room for operational leverage improvement.

Earnings Power And Capital Efficiency

The company’s capital efficiency is tempered by its asset-intensive operations, though its €191.7 million cash reserve and negligible debt provide flexibility. Free cash flow generation (€80 million after capex) supports reinvestment and dividends, but the beta of 1.664 suggests higher volatility versus broader markets, likely tied to cyclical end-market exposure.

Balance Sheet And Financial Health

Lisi maintains a robust balance sheet with €191.7 million in cash and no reported debt, signaling strong liquidity. This conservative structure aligns with its industrial cyclicality, providing a buffer against downturns. The absence of leverage enhances financial flexibility for strategic acquisitions or R&D initiatives in high-growth segments like medical devices or aerospace composites.

Growth Trends And Dividend Policy

Growth is likely tied to aerospace recovery and automotive electrification trends, though medical segment innovation offers diversification. The €0.39 dividend per share implies a payout ratio near 32%, balancing shareholder returns with reinvestment needs. Share count stability (45.5 million outstanding) suggests disciplined capital allocation.

Valuation And Market Expectations

At a €1.44 billion market cap, Lisi trades at ~0.8x revenue and ~26x net income, reflecting mixed expectations. The premium to industrials peers may account for its niche positioning and debt-free status, but margin expansion potential remains key to justifying valuation.

Strategic Advantages And Outlook

Lisi’s strengths lie in its technical expertise, diversified end markets, and balance sheet resilience. Near-term headwinds include supply chain costs and aerospace demand variability, but long-term opportunities in lightweight materials and medical implants could drive re-rating. Execution on operational efficiency and targeted R&D will be critical.

Sources

Company filings, Euronext disclosures