Investing in digital euro /Publicis /Worldline

AI Summary

The author wants digital euro infrastructure exposure over 5-10 years and considers Publicis Groupe as the only listed primary-provider proxy and Worldline as a risky backup play.

PUB.PA — WATCH The author believes the digital euro project will be huge over 5-10 years and sees Publicis Groupe as the only listed way to gain exposure via its Sapient/Tremend division, which handles the alias lookup component. He notes the stock is stable, has a low P/E of 15-16, and is a large company with broad reach, but the marketing-heavy business makes the investment case muddy. The main stated risk is that the project is handled by its German division, triggering his concern from the Wirecard fiasco.

Fundamentally, I don’t see any major issues:

The stock price is stable.
The P/E ratio is low (15-16).
It’s a large company with a broad reach.

WLN.PA — WATCH The author views Worldline as a backup provider for many digital euro tasks that could win big if the primary providers fail to deliver. He notes the stock is currently cheap but for a reason: Worldline is struggling to generate profit and, as a large 'tanker' company, could take a long time to turn around or end up borrowing heavily without progress. The opportunity is conditional on the other providers failing.

Worldline is the backup provider for many of these tasks and could win big if the others fail to deliver. Worldline is currently on sale, but not without reason; they are struggling to generate profit.

Score 1

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I believe the digital euro project will be huge, though it will likely take 5-10 years to become a success, which is why I want to invest in it now. However, I don’t think banks or payment infrastructure companies like Nexi Group and Worldline will be the winners; they have previously proven that they cannot or will not compete with Visa/Mastercard or Google/Apple Pay.

There are five main providers, each responsible for their own specific component. If they succeed, their contracts will be extended to 15 years:

1. Alias lookup – Sapient GmbH & Tremend Software Consulting S.R.L.
2. Risk and fraud management – Feedzai
3. App and software development kit – Almaviva SpA & Fabrick SpA
4. Offline solution – Giesecke+Devrient
5. Secure exchange of payment information – Senacor FCS

Case 1 I would have liked to invest in Feedzai, as I believe they have the most difficult part of the task. However, the only one publicly traded is Sapient/Tremend, better known as Publicis Groupe. They are primarily known for marketing, which makes the investment case a bit muddy. I’ve read about Publicis Groupe on Reddit, and apparently, working conditions are poor in North America, though I’m unsure if that is a general issue within the marketing industry or specific to North America. Fundamentally, I don’t see any major issues:

* The stock price is stable.
* The P/E ratio is low (15-16).
* It’s a large company with a broad reach.

However, it is their German division handling the project, and I have some trauma regarding Germany and fintech (the Wirecard fiasco).

Case 2 Worldline is the backup provider for many of these tasks and could win big if the others fail to deliver. Worldline is currently on sale, but not without reason; they are struggling to generate profit. Since Worldline is a tanker of a company, it could take a long time to turn things around, or they could end up borrowing a lot of money without getting anywhere.

  
Question for you:  
  
Do you see other ways into the digital euro project if you want to invest in the underlying infrastructure? Is there a "backdoor" to private companies like Feedzai or G+D, or are you forced into a corporate structure like Publicis, where you get a lot of other things included that you might not want?

Ideas

u/frits063 Reddit r/ValueInvesting

Publicis gives listed digital euro exposure but is muddied by marketing

The author believes the digital euro project will be huge over 5-10 years and sees Publicis Groupe as the only listed way to gain exposure via its Sapient/Tremend division, which handles the alias lookup component. He notes the stock is stable, has a low P/E of 15-16, and is a large company with broad reach, but the marketing-heavy business makes the investment case muddy. The main stated risk is that the project is handled by its German division, triggering his concern from the Wirecard fiasco.

u/frits063 Reddit r/ValueInvesting

Worldline is a cheap digital euro backup but struggles with profit

The author views Worldline as a backup provider for many digital euro tasks that could win big if the primary providers fail to deliver. He notes the stock is currently cheap but for a reason: Worldline is struggling to generate profit and, as a large 'tanker' company, could take a long time to turn around or end up borrowing heavily without progress. The opportunity is conditional on the other providers failing.

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Ideas

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