New Look Vision Group Inc

New Look Vision Group Inc (TSX: BCI) is a leading provider of eye care products and services in Canada. The group functions under four main banners: New Look Eyewear, Greiche and Scaff, Vogue Optical, and Iris The Visual Group.

Key highlights

• FFL Partners, LLC and CDPQ to acquire New Look Vision Group Inc: Recently, the company announced that FFL Partners, LLC and Caisse de dépôt et placement du Québec (" CDPQ ") would acquire the company at a purchase price of CAD 50.00 in cash per share. This transaction values BCI at approximately CAD 800 million on an equity value basis and at approximately CAD 970 million on an enterprise value basis.

• Decent FY20 Results: In FY2020, the Company actively continued to pursue its significant pipeline of acquisition opportunities in Canada and the United States and acquired 36 stores during the year. Despite closures and disruptions in the first half of 2020, the Company executed its strategy and delivered solid results for the fourth quarter of fiscal 2020. Quarterly revenues and comparable-store sales grew by 25.0% and 12.0% year-over-year, and EBITDA increased by 60% over the previous corresponding period.

Financial overview of FY2020 (In thousands of Canadian dollars)

Source: Company

• In FY 2020, the company reported revenue of CAD 274.7 million, decreased by CAD 23.1 million from CAD 297.8 million in the previous corresponding period. The revenue depressed primarily due to government-mandated store network shutdowns and related headwinds, offset by newly acquired stores.
• The company posted a higher EBITDA of CAD 73.5 million in FY2020, against CAD 50.4 million in FY2019, mainly due to lower salary distribution and lower other expenses.
• EBIT stood at CAD 15.5 million compared to CAD 26.3 million in the previous corresponding period. The lower EBIT was primarily due to higher depreciation, amortization and loss on disposal, which stood at CAD 39.6 million V/s CAD 17.9 million and financial expenses, which increased to CAD 20.6 million V/s CAD 8.7 million in FY2019, respectively.
• The company registered a net income of CAD 11.8 million in the reported period against CAD 19.3 million in pcp, primarily due to the above-stated reasons.

Risks associated with investment

The company witnessed dispersed revenues primarily due to government-mandated store network shutdowns and related headwinds on the back of Covid-19. Further restrictions could again impact the operations of the company. 

Stock recommendation

Recently, the Company announced that it had agreed to be acquired by FFL Partners, LLC and “CDPQ” for a purchase price of CAD 50.00 in cash per share and the transaction is expected to close in the first half of 2021. Since the transaction would be an all cash deal, shares of BCI are likely to be delisted from the stock exchange. The offer price is CAD 50.0 per share and the stock is trading at the same level. We suggest the investors to book the profit in the stock. Hence, we recommend a ‘Sell’ rating on the stock at the closing price of CAD 49.60 on April 15, 2021

1-Year Price Chart (as on April 15, 2021). Source: Refinitiv (Thomson Reuters)

Disclaimer

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