The new factory (at last) in sight
SIGNIFICANT NEWS
FACT

DMS announced that it has reached an agreement with all parties for the construction of a new production unit, which should be up and running in Q2 20.


ANALYSIS

The factory will replace and gather the three current sites (Montpellier, Nîmes and Lunel) into one single building, with obvious savings on logistics, while the cost should remain the same according to management. The building will be leased over 12 years to SCPI Pierval, which belongs to Groupe Asset Management, while Eiffage Construction will build it over the next 18 months or so. It is worth mentioning that the project was initially planned earlier (with a start of the new factory by year-end 2018), thus the delay is about a year and a half compared to what was expected. It is, however, still a sign that management believes in the longer-term prospects of the group, even if investors will most likely wait until this translates into (at least) a return of top-line growth, after a number of disappointments/failures in FY18.


IMPACT

No change to our numbers/target price on this piece of news.