In Search of Belgian Value and Pride

 

Belgium: Where Surrealism Isn’t Just Art, It’s Policy

Nourished by the exquisite art of René Magritte and Paul Delvaux, Belgium is often seen as the country of surrealism. Some even question whether Belgium is a real country at all. Social welfare is generous, most Belgians enjoy a high standard of living, and yet they seem to bask in an everlasting winter of discontent.

Belgians have a long history of being dominated by other nations. Could that be why the country has developed such a peculiar, twisted culture? Belgian bureaucrats are prolific producers of regulations. “Europe” is often used as an excuse, but many citizens point to the petty nature of countless local rules. At the same time, Belgians seem to have made it second nature to bend those very rules. They conform publicly, nodding in agreement, while secretly doing the opposite. Belgium has one of the highest tax burdens in the world, yet Belgians are champions at finding creative ways to circumvent taxes, a pitiful waste of talent and energy. The new Flemish government prides itself on “protecting our wealth” by promoting industry. One minister is tasked with reducing the regulatory burden, while another simultaneously tightens rules on labor migration. In dismay, the employers' organization calls this approach incomprehensible. It’s just another Belgian paradox.

For deeper insight into the intricacies of Belgian political life, see Noël Slangen’s Wat een land, dwaasheid en hoop in de Wetstraat (What a Country: Foolishness and Hope in Belgian Politics).

 

From Caesar’s Bravest to Europe’s Most Cautious: The Belgian Investment Paradox

Caesar may have written “Horum omnium Belgae fortissimi sunt” (“Of all the peoples he conquered, the Belgians were the bravest,” De Bello Gallico), but in reality, courage often seems to be lacking. Courage to make tough decisions, to stand up for one’s values, or even to support our own companies. It’s ingrained in our culture, where a minister can proudly proclaim that “only one in ten Belgians owns stocks”. After all, the state takes care of you, so why bother investing or taking risks?

With that mindset, the investor community is one that politicians feel no need to take seriously. Never mind that this attitude quietly undermines our country’s competitive position. Just next door, Luxembourg offers a safe haven for weary investors, while the truly wealthy head for fortress Switzerland - known for its chocolate, even though the best chocolate is still produced in Belgium.

Belgians often lack pride, especially when it comes to the achievements of their own people and companies. This is painfully reflected in the dismal state of the Belgian stock market. In the 1990s, Brussels had a vibrant IPO market. Today, an IPO is a rare event. Last year, we reflected on “the Belgian discount.” That discount only deepened throughout 2024 as investor interest waned.

Ironically, in 2025, European - and Belgian - stocks came charging out of the gate, basking in a solid earnings season, with industrials and banks leading the rally. Symbolically, Aperam, the stainless-steel producer, is up 19% year-to-date despite U.S. steel tariffs and the looming threat of increased imports into Europe. Meanwhile, the Bel-20 is lagging, up just 3.5%, dragged down by its heavyweights Argenx and UCB consolidating their exceptional gains from 2024.

It’s time for an update—taking stock of the latest newsflow on Belgian companies.

 

From China to Paris: The Curious Case of Ageas and Its Changing Hands

Starting with breaking news: as of February 10th, BNP Paribas now owns 15.07% of insurer Ageas - a rather ironic twist. During a recent meeting with Paris-based investors, BNP Paribas’s CFO emphasized that the initial 10% stake in Ageas served a single purpose: to increase the bank’s holding in its insurance arm, AGI Assurances, from 25% to 33% (Ageas owns the remaining 75%). Since increasing the stake directly at the subsidiary level proved complex, BNP opted to do so via the parent company.

BNP purchased its first 9% stake from Chinese investment firm Fosun. At one point, concerns about excessive Chinese influence loomed, but these fears subsided after the Belgian government holding, SFPIM, acquired a 6.3% stake in Ageas from Ping An in early 2022. That move was aimed at anchoring Belgian interests in the insurer. Adding a surreal twist, SFPIM also holds a 5.6% stake in BNP Paribas itself.

However, there’s a real risk that neither of these stakes will offer meaningful influence over key decisions. The bitter irony would be if Ageas ultimately falls under French control, much like Royale Belge, which was absorbed by Axa in the past. Let’s hope BNP Paribas remains a trusted partner rather than an unwelcome conqueror.

 

Galapagos Goes West, UCB Feels the Pressure, and Belgian Pharma Keeps Calm

In another cross-border twist, Galapagos now counts two American shareholders - EcoR1 and Tang Capital Management - among its investors. Interestingly, the share price rose despite a significant downgrade by an international broker. While many investors remain skeptical about Galapagos’ decentralized CAR-T cancer therapy, at least some specialized American biotech investors seem to spot hidden value. The company aims to have its first therapy on the U.S. market by 2028. Still a long and uncertain road ahead.

In contrast, Argenx and UCB boast well-established franchises. Both, along with Galapagos, participated in the annual JP Morgan Healthcare Conference in San Francisco, where they offered rough guidance for 2025. Fundamentally, Argenx and UCB are performing strongly, though their stock prices remain weak following last year’s exceptional outperformance. Adding to the pressure, short interest in UCB has risen sharply, indicating that some investors are betting on a further decline in its share price.

The Belgian pharma sector has remained pretty sanguine about the threat of U.S. tariffs, citing protections under World Trade Organization treaties and the industry’s strong expertise and know-how in Belgium. So far, Belgian companies have not been directly targeted by tariffs. Many have contingency plans in place, such as shifting part of their production to the U.S., though the risk remains a source of uncertainty.

It’s also worth noting that larger Belgian pharma companies have significant global exposure, making them less vulnerable to domestic economic weakness. Despite market uncertainties, most continue to invest heavily, including in practical applications of artificial intelligence.

 

EVS Plays Forward, Barco Plays Catch-Up, and Melexis Waits for a Cue

One company doubling down on North America is EVS, a leading provider of live video technology for broadcast and new media productions. EVS plans to expand its U.S. presence by increasing its American workforce by 40% and building a dedicated training and service center. A true Belgian champion, EVS reported excellent results for 2024, paired with a bullish outlook. Since Serge Van Herck took over as CEO in 2019, the company has followed its aptly named strategy, “PLAY FORWARD,” and set an ambitious BHAG (Big Hairy Audacious Goal) to become the leader in its sector by 2030, targeting sales of at least €350 million. While still a “small” company, EVS is already a clear global leader in its niche markets, with a superb execution track record. Yet, according to analysts, its valuation remains undemanding.

When investors are too short-sighted to properly value a company, there are typically a few paths forward: the company can go private (via family owners or private equity) or initiate a share buyback. Barco, Bekaert, and EVS are all running significant buybacks while maintaining generous dividend policies. At the same time, they continue to invest in organic growth and keep options open for M&A. EVS stands out from the pack, being the only company that combines a high dividend yield with a share buyback program, investments in both organic and inorganic growth, and - most importantly - sustainable growth.

Barco, by contrast, also offers a high dividend yield and recently launched a share buyback, but it has struggled in recent years, particularly in 2024. Its low valuation reflects a lack of consistent growth. To regain investor confidence, Barco has set a cautious outlook, aiming for modest topline growth alongside an increase in EBITDA margins. Meanwhile, shareholders are rewarded with a generous dividend and a €60 million share buyback. The market responded positively, with Barco’s stock jumping 16% on the news, whether due to genuine value-seeking or simply short covering remains up for debate.

Melexis was another company that had little to boast about in 2024. Results fell short of its own guidance as customers continued to pare down inventories, a process that has extended into the first quarter of 2025. Yet, the stock market appears willing to look past the short-term weakness and anticipate better times ahead. It’s worth noting that the company’s valuation is currently at a historic low.

 

Real Estate Breathes Again, KBC Holds Strong…Until Taxes Knock

The same holds true for real estate stocks, which were hit particularly hard by the dramatic shift in the interest rate environment. However, now that the ECB has well entered a new cycle of rate cuts, the outlook has brightened. Top Belgian real estate companies have weathered the storm well, having acted swiftly to raise capital and hedge their debts against rising rates. During recent earnings calls, WDP, Aedifica, and VGP all presented positive outlooks. Aedifica noted that portfolio yields have stabilized, operators have recovered, and new investments are being added to its re-set pipeline. For logistics developers and owners like VGP and WDP, "capital recycling" remains key. Both companies boast strong balance sheets, robust pipelines, and benefit from structural long-term demand. Additionally, they generate income from significant investments in renewables, including solar panels and batteries. The 2022/23 period was undeniably stressful for real estate companies, but the future now looks much brighter. Investors should take note of the attractive valuations currently on offer.

When it comes to interest rates, KBC immediately comes to mind. The bank has consistently exceeded expectations in recent years. After the hard lessons of the financial crisis, KBC successfully rebuilt itself and now boasts one of the strongest capital ratios in Europe. Its diversified business model makes it more resilient to sudden market shifts, combining growth in Eastern Europe with solid profitability in its mature home market. KBC’s income is well-diversified across interest income, fees, and other sources, including insurance. The bank also ranks highly in terms of efficiency, thanks in part to its popular AI-powered banking app, “Kate.” In short, KBC is performing well.

Unfortunately, politicians have found a new cash cow. Rather than taking pride in a strong, resilient bank, they’ve opted to increase taxes. And, of course, the vox populi will not complain.

 

Resilience at a Reasonable Price

So far, results have shown that Belgian companies are resilient, boasting strong balance sheets and solid profitability. Several names stand out - Argenx, EVS, KBC, Lotus Bakeries, WDP, VGP, and UCB - all champions in delivering added value and worthy of recognition for their achievements. In most cases, the stock market has rewarded their performance.

An exception, however, is Lotus Bakeries, which has lost 16% of its value this year, an atypical outcome for such a top-performing company. This decline may be a case of irrational investor exuberance catching up, as Lotus’s valuation had previously been driven to stratospheric levels. No matter how strong certain trends may be, valuation ultimately prevails. Buying an overvalued stock inevitably lowers expected long-term returns.

On the flip side, low valuations are one reason why diversifying into Belgian equities remains attractive. Some companies are trading at extremely low multiples. Based on consensus estimates, Bekaert is valued at 6.8x and 6.1x its 2025 and 2026 earnings, respectively. Who bids lower? X-Fab trades at just 5.9x and 5.1x earnings for 2025 and 2026.

Of course, low valuations don’t automatically signal a bargain. Market expectations could be entirely off. It’s up to investors to dig deeper and uncover the real opportunities.