After going through Dividend Aristocrats I decided to look on some big names in Europe. One of them is Sanofi, which is traded in Paris (there are also ADRs in US, but maybe it is a good idea to have some assets in non-USD currency).

Sanofi is a big pharmaceutical company operating mainly in seven areas: cardiovascular, central nervous system, diabetes, internal medicine, oncology, thrombosis and vaccines. Company is also having Animal Health segment (Sanofi and Boehringer Ingelheim are in exclusive talks over a $20 billion swap of the French pharmaceuticals company’s animal health business for the family-owned German group’s consumer health operation.). Split of sales is presented below:

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As we can see business is quite well diversified. It should be emphasized, that in pharma business it is all the case of patents and new products – if there are no new products implemented then it is probable that sales will decline or at best will be flat.

It is impossible for me to appraise R&D pipeline, but what I see that there are many products in Phase III so relatively close to registration, which might be supportive for financial results.

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Valuation:

Market cap = €92b

Net debt = €11b

P/E = 13

EV/EBITDA =  8.5

Dividend yield = 4.2% (very good yield comparing to EU 0% yields on bonds!) + buyback around 1%.

 

In my opinion valuation is quite attractive for long term investors. Results in next years should be at least flat. Company has increased dividend annually for 22 years now. Dividend is paid once a year, which might be a drawback for some investors, who live off dividends.

Shares are after significant drop over the last year from around €100 to around €72. It seems to be a good opportunity.

 

Summing up, I think that prices around €70 are quite attractive from long term perspective. Decent dividend + reasonable valuation + stable business seems to be all I am looking for a long term investment.

 

Disclaimer – SNY no position