BFF Bank (BFF.MI), mcap=€1.3bn, price $7.01 vs $6.96

$BFF.MI pitch:
– Unique bank with phenomenal returns on capital run by great management trading at 7.6x earnings.
– Leader in Italian factoring and specializes in the non-recourse sale of trade receivables from the National Healthcare System and the public administration.
– Also has similar operations in Spain and Portugal.
– Unique niche with very limited credit risk.
– 35% returns on tangible equity.
– Shareholder-friendly management, which understands capital allocation and pays out 100% of earnings in dividends. 11.7% dividend yield.

$BFF.MI valuation:
– Depressed valuation due to BFF being classified as a ‘European bank’.
– On multiple occasions traded at 11x PE, vs 7.6x currently.
– At the same level of earnings and 11x exit in a few years, the stock would double over 4 years.

Exp. gain: 30% IRR over 4 years.

Full BFF.MI write-up (free guest account required):

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