High growth business modelGood day,
I was recently reading few comments from all, and some spoke about dividend increase, other about huge deal, and so on. I wanted to bring in few details that worth knowing about the business model Savaria is establishing which make it a potential 10 baggers (Company that will multiply value by 100x from initial IPO).
Savaria is a multi-channel business model vertically integrated up to 3 LEVEL which is very rare.
LEVEL 1 => Manufacturer -> Savaria assembly lines in Quebec/Ontario, Savaria Huizhou manufacture, SPAN-Medical, Premier lift, etc...
LEVEL 2 => Distributor -> Silvercross, automotive dealer, the new work distributor they bought last year, etc...
Level 3 => Installator -> They do installation through out the dealer, but also have specialized team to perform installation or work in collaboration with specific contrator to install Savaria equipement in which they lead the installation process/standards.
This 3 level infrastructure allow them to control cost and sales price from the manufacture point to the end user purchase. It's way more easy to win a governemental contract when you can work our your cost from the raw production to the installation (in comparison to when 2 other companies took their profit from it before), which give them a high competitivity advantage when ever the market will reach a consolidation stage.
For the moment they are in the good industry at the good moment, and they are using their acquisition both way, to reach new market for their active product line, but also retroactively to push back this new product throughtout their active distribution network. This way any acquisitions can be absorbed with very low impact on the organisation growth, as it does not take 3-4 years to regenerate the cash flow required for the next move. To my opinion, no fact confirm that, but within a year they clear out any acquisition made, ready for the next target, and that is applicable in each of the 3 level. And this will be accelerating as they get more experience with acquisition.
From that I mean that if they acquire a new manufacture for X year, the same year they can also acquire new distribution points, and acquire new installation facilities, without any risk for the cash flow and/or financing ratio deep effect.
I strongly recommend Savaria to anyone that wish to perform long term investment with high return rate.
Some of you mentionned about Dividend increase, but please consider that like RCH (Richelieu), Savaria is focus on increasing it presence on the market thru acquisition. That phase is a consolidation phase, and the dividend yes will be increase, but not as fast as you think. They seems way more focus on value creation thru the SP, which is a good thing for anyone that hold this position for the long term. Consider the dividend as a small bonus to reward you for keeping the stock, but the real reward will be down the road, when we reach the 10 baggers status, which I believe will take less than 10 years the way it is growing now.