Issue 001: 40% of Tangible Book Value, 0.71x NCAV, 4.2x Free Cash Flow, 0.9x EV/EBIT, 70% Insider Ownership
Sunday 13th April, 2025
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Company Profile
Akwel SA is a French-based manufacturer of automotive components and systems, specialising in fluid management, mechanisms, and structural parts for light vehicles. The company operates across 20 countries, with over 40 production sites and technical centres serving major automakers around the world.
Founded in 1972 and listed on Euronext Paris in 1994, Akwel remains a family-owned and operated business under the leadership of the Coutier family. The group combines technical engineering capability with financial conservatism, consistently generating free cash flow and reinvesting in its operations, while maintaining a solid balance sheet and returning capital to shareholders.
Thesis
We believe Akwel SA (EPA:AKW) is trading at a discount to intrinsic value.
Reason 1: Low Price to Net Assets
Akwel currently trades at a market capitalisation of €191.3m.
The company holds total assets of €836.2m, of which we consider €707.1m to be saleable tangible assets.
After deducting total liabilities of €229.1m, this results in an adjusted net asset value of €478m.
This equates to a standard price-to-book ratio of 0.31x, and an adjusted price-to-book ratio of 0.40x.
Put simply, the company is trading at a 60% discount to its net tangible assets, or 40 cents on the euro.
Reason 2: Low Price to Free Cash Flow
After adjusting for maintenance capital expenditures and other minor items, Akwel generates normalised free cash flow of approximately €45m per year.
Relative to its market capitalisation of €191.3m, this implies the company is trading at a P/nFCF of 4.25x, equivalent to a free cash flow yield of 23.5%.
Reason 3: Low Price to an Acquirer
Akwel has a total enterprise value of €58.5m, and generates approximately €60m in normalised EBIT per year.
This equates to an EV/nEBIT multiple of 0.97x, and an EV/nFCF multiple of 1.3x.
While the company is closely-held with significant insider ownership, these valuation levels remain highly attractive, and conducive to a successful equity investment.
Reason 4: Low Price to Net Current Asset Value
Akwel holds total current assets of €498.2m, comprising:
Cash and Cash Equivalents – €150.4m
Receivables – €206.2m
Inventory – €141.6m
After subtracting total liabilities of €229.1m, we arrive at a net current asset value of €269.1m.
With a market capitalisation of just €191.3m, Akwel is trading at a P/NCAV ratio of 0.71x.
In other words, it qualifies as a net-net, and is currently priced below a conservative estimate of its liquidation value.
Reason 5: High Cash to Market Capitalisation
As noted above, Akwel holds a cash and cash equivalents balance of €150.4m.
Relative to its market capitalisation, this means that 78% of Akwel’s current valuation is backed by cash alone.
Reason 6: Growing Dividend
Between 2014 and 2024, Akwel’s annual dividend has increased from €1.3m to €7.9m, representing a compound annual growth rate of 19.5%.
At present, the company offers an annual dividend yield of approximately 4.13%.
Reason 7: Repurchasing Shares
On 25th May 2023, Akwel authorised a share repurchase programme allowing the company to buy back up to 10% of its share capital, equivalent to 2,668,060 shares, at a maximum price of €50 per share, for a total consideration not exceeding €133.4m.
In its half-year results published in H2 2024, the company announced its intention to repurchase 190,800 shares in August 2024, representing approximately 0.7% of shares outstanding.
Reason 8: High Insider Ownership
Akwel was founded in 1972 by the Coutier family and remains a family-owned, owner-operated business.
The Coutier family currently holds approximately 70% of the total shares outstanding, and 82.15% of the voting rights.
André Coutier serves as President of the Supervisory Board, alongside Geneviève Coutier, Émilie Coutier, and Christophe Coutier, who also sit on the board.
Mathieu Coutier is President of the Executive Board, joined by Benoît Coutier and Nicolas Coutier as fellow members.
On 1st October 2023, Akwel appointed Benoît Coutier as Chief Financial Officer.
Benoît is a plastics engineer with a Master’s degree in International Business Strategy and Engineering from ESSEC, and has been with Akwel since 2003.
His tenure includes roles as Cost Controller (2003–2004), External Growth Analysis Manager (2005–2009), Director of the Brazilian subsidiary (2010–2015), and Legal Vice President from 2015 onwards.
Reason 9: Low Debt
Between 2019 and 2024, the company reduced its total debt from €139.6m to just €17m.
To put this in perspective, Akwel repaid over €30m of debt in the last year alone.
If this pace of deleveraging continues, the company is on track to become debt-free within the next 12–18 months.
With only €17m of remaining debt and a cash balance of €150.4m, Akwel holds a net cash position of approximately €133m - a notably strong position to be in.
Reason 10: High Gross Margins
Although gross margins have seen a minor decline over the past two decades, the company has consistently maintained gross margins above the 50% mark.
In 2024, gross margins stood at 54.5%, compared to a 20 year average of 57.7%.
Reason 11: Growing Shareholders’ Equity
From 2010 to 2024, shareholders' equity increased from €113.2m to €607.1m, reflecting a compound annual growth rate of 13.3%.
Combined with strong cash flow generation, Akwel continues to strengthen its equity base, ensuring both stability and growth.
Risk 1: Global Car Production
The single largest driver of Akwel’s revenue is the rate of global car production, particularly in Europe, North America, Turkey, and Asia.
This means that the company’s revenue is largely at the mercy of exogenous factors such as government programs, trade agreements, regulatory changes, social issues, and general economic and geopolitical factors.
Put simply, any major downturns or changes in the global automotive market, be it directly or through changes to regulation, tariffs, or other trade barriers, could considerably impact the performance of the company.
Risk 2: Customer Concentration
Akwel generates 61% of its revenue from just two automakers: Stellantis and Ford. As a result, the independent performance of these two companies has a considerable influence on Akwel’s top line.
If we include Renault-Nissan-Mitsubishi in the mix, these three customers account for 73.1% of Akwel’s total revenue, up from 65.9% in 2022.
In other words, customer concentration is increasing.
In total, Akwel’s top ten customers contribute 88.2% of total revenue.
The company has acknowledged this risk and stated its intention to diversify its customer base in the coming years.
Risk 3: Supplier Risk
To manufacture its automotive components and systems, Akwel relies on suppliers for raw materials, primarily plastics (PA6, PA66, POM), rubbers (EPDM, HNBR, FKM), metals (steel, aluminium), and electronic components (sensors, actuators).
If Akwel is unable to secure these materials at the right price, quality, or quantity, it cannot adequately serve its customers. This would have a direct impact on revenue, profitability, and brand reputation.
To mitigate this, Akwel has created an inverse of the customer concentration situation, and implemented a purchasing and supplier location strategy aimed at avoiding over-reliance on any single supplier or country.
As a result, its largest supplier represents just 4% of production purchases, with the top five accounting for 18%, and the top ten for 28%.
Risk 4: Price of Raw Materials
Closely related to supplier risk is the risk posed by raw material prices.
Akwel’s production of fluid systems, hinges, and sensors depends heavily on plastics, metals, and rubber, together making up around 50% of its direct operating costs.
Volatility in these markets, such as the 20% aluminium price spike in 2024 or the PA66 shortages that doubled costs during global supply chain disruptions, can begin to erode Akwel’s margins.
This leads to increased bid prices on OEM contracts with customers like Stellantis and Ford, risking lost deals to larger competitors like TI Fluid Systems, which operate at a larger scale and are better equipped to absorb costs.
Since raw material prices are inherently volatile and price increases can’t always be passed on to customers, Akwel may be forced to absorb the impact on its operating margins.
Summary
Akwel was founded in 1972, listed in 1994, and has demonstrated a successful 53 year operating history.
It’s family owned-and-operated, with the Coutier family not only assuming positions within the supervisory board, executive board, and C-suite management, but also owning over 70% of the outstanding shares.
The family appears to operate in the best interest of minority shareholders, evidenced not only by the business’s strong operating performance, but by their continued desire to pay dividends, repay outstanding debt, and reduce the share count.
The company trades at a 60% discount to adjusted tangible book value, 4.25x normalised free cash flow, an EV/nEBIT of 0.97x, an EV/nFCF of 1.3x, a P/NCAV of 0.71x, and holds 78% of its entire market cap in cash.
In addition to this, shareholders’ equity has compounded at 13.3% per year over the last 15 years, and continues to trend upward.
While there are risks, namely exposure to global car production cycles, high customer concentration with Stellantis and Ford, sensitivity to raw material costs, and potential supplier disruptions, these are acknowledged and partially mitigated by management’s diversification strategies and robust balance sheet.
Despite these risks, we believe Akwel remains significantly undervalued and represents a compelling investment opportunity.
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Disclaimer
This is not investment advice. Always do your own due diligence and seek the appropriate professional advice before buying or selling securities. We make no representation, warranty or undertaking, express or implied, as to the accuracy, reliability, completeness, or reasonableness of the information contained in our publications. Any assumptions, opinions and estimates expressed in our publications constitute our judgment as of the date thereof, and are therefore subject to change without notice. Any projections contained in our publications are based on a number of assumptions as to market conditions. Past performance does not indicate future results, and there is no guarantee that projected outcomes will be achieved. Marsh Equity Research is not acting as your financial advisor or in any fiduciary capacity.