High Co. SA (HCO.PA) fair value

ACCE thesis

High Co. SA is a French advertising agency group that runs a network of agencies handling media buying, digital campaigns and brand communication for clients across Europe. The case rests on its scale of revenue growth: sales expanded 28.0% over the latest period, which is quick for an agency business that usually moves with its clients' marketing budgets. Margins are the weak point, with a 13.0% gross margin and a slightly negative operating margin of -0.9%, so the growth has not yet translated into profit. At a forward P/E of 7.9 and a market capitalisation of about 69M EUR, the stock is priced for a low-margin business that needs to prove operating leverage before the multiple can be trusted. The question for a deeper look is whether revenue growth can convert into positive operating income, since with a 0.1% ROE and no index membership, the upside depends on that conversion happening.