Main menu
Edison Group
  • Home
  • Equities

    Equities

    View All Equities

    Equities by Sector

    Chosa

    MCap

    SEK57m

    Last close

    SEK0.80

    ▲ 0.20 (33.33%)

    Vection Technologies

    MCap

    AUD47m

    Last close

    AUD0.04

    ▲ 0.00 (12.90%)

    Metro Bank

    MCap

    GBP684m

    Last close

    GBP1.02

    ▲ 7.90 (8.43%)

  • Sectors

    Sectors

  • Thematics

    Thematics

    View All Thematics

    Latest

  • Audiovisual

    Audiovisual

    View All Audiovisual

    Latest

Pointer Telocation — Strong foundations for future growth

Pointer Telocation — Strong foundations for future growth

Pointer Telocation (PNTR) achieved a strong performance in both product and services revenues in the third quarter supported by 16% y-o-y organic subscriber growth and a boost to product margins from increased sales of higher-quality telematics units. PNTR looks set to derive substantial cost synergies in 2018 from the integration of Cielo Telecom’s operations in Brazil and we foresee the potential for the new CelloTrack Nano IoT tracker product to emerge as a major profit driver following strong recent interest in the market. We have increased our 2017 and 2018 EBITDA forecasts and reduced our fair discount to peer multiples, resulting in an increase in our peer multiple valuation from $15.4 to $19.3 (NIS 67.8) per share, and an 11% increase in our DCF valuation to $18.1 (NIS 63.6)per share.

Analyst avatar placeholder

Written by

Pointer Telocation

Strong foundations for future growth

Q317 results

Tech hardware & equipment

27 November 2017

Price*

$17.80/NIS 62.45

Market cap

$143m/NIS504m

*Priced as of 23 November 2017

NIS3.5108/US$

Net debt ($m) at 30 September 2017

4.6

Shares in issue

8.1m

Free float

71.3%

Code

PNTR

Primary exchange

Nasdaq

Secondary exchange

TASE

Share price performance

%

1m

3m

12m

Abs

1.4

28.1

129.7

Rel (local)

0.6

20.9

94.8

52-week high/low

US$18.9

US$6.8

Business description

Pointer Telocation (PNTR) is a leading provider of MRM services and products to the automotive and insurance industries. Key services are asset tracking, fleet management and monitoring goods in transit/IoT. Its main markets are Israel, Brazil, Argentina, Mexico and Europe.

Next events

FY17 results

February 2018

Analysts

Anna Bossong

+44 (0)20 3077 5737

Richard Jeans

+44 (0)20 3077 5700

Pointer Telocation (PNTR) achieved a strong performance in both product and services revenues in the third quarter supported by 16% y-o-y organic subscriber growth and a boost to product margins from increased sales of higher-quality telematics units. PNTR looks set to derive substantial cost synergies in 2018 from the integration of Cielo Telecom’s operations in Brazil and we foresee the potential for the new CelloTrack Nano IoT tracker product to emerge as a major profit driver following strong recent interest in the market. We have increased our 2017 and 2018 EBITDA forecasts and reduced our fair discount to peer multiples, resulting in an increase in our peer multiple valuation from $15.4 to $19.3 (NIS 67.8) per share, and an 11% increase in our DCF valuation to $18.1 (NIS 63.6)per share.

Year end

Revenue ($m)

PBT*
($m)

EPS*
(c)

DPS
(c)

EV/EBITDA
(x)

P/E
(x)

12/15

60.6

6.4

67

0.0

16.8

26.7

12/16

64.4

6.6

62

0.0

15.2

28.8

12/17e

79.3

10.3

96

0.0

10.7

18.6

12/18e

88.9

12.7

116

0.0

9.0

15.4

12/19e

96.7

13.9

125

0.0

8.3

14.2

Note: *PBT and EPS (fully diluted) are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.

Third quarter brings good organic growth & margins

Third quarter results were boosted by faster growth in organic subscriber additions than in previous quarters, which resulted in 16% y-o-y organic subscriber growth and a 26% increase in headline subscribers after acquisitions. Revenues per user remained stable in spite of the addition of lower ARPU ride share customers in the US, while operating leverage and high product margins led to a 65% y-o-y increase in EBITDA.

More benefit from SA acquisition and cost savings

We have increased our full year 2017 and 2018 EBITDA by 4.2% and 9.3%, respectively, for the recent acquisition of 2,400 subscribers in South Africa as well as to reflect the strong trend in organic additions and expected further cost savings in 2018 from the full integration of Cielo Telecom.

Valuation: Increase in peer valuation of share to $19.3

PNTR’s share price has more than doubled this year as the group has gained exposure to the fast-growing driver monitoring market in the US, has seen earnings surge from the Cielo Telecom acquisition in Q416 and has gained a major $2-3m pa order for its new CelloTrack Nano IoT product. The recent launch of a connected car product is also attracting interest from OEMs and brings exposure to the ADAS revolution. We believe that these strong foundations and the multiple product streams will underpin future top-line growth, while high operational gearing from the SaaS model and synergies from acquisitions should enable further margin gains. In view of this, we have reduced the “fair” peer EV/EBITDA discount assumed in our valuation from 10% to 7%. This together with higher earnings expectations has led to an increase in this valuation from $15.4 to $19.3 (NIS 67.8) per share. Helped by increased earnings forecasts, our DCF value has risen 11% to $18.1 (NIS 63.6) ps.

Quarterly results review

Exhibit 1: Quarterly key data/ratios

$m

Q317

Q316

Change
y-o-y (%)

9M17

9M16

Change
y-o-y (%)

Q117

Q217

MRM subscribers

249,000

198,000

25.8

249,000

198,000

25.8

231,000

239,000

Net additions

10,000

6,000

66.7

27,000

18,000

50.0

9,000

8,000

of which Subscriber acquisitions

0

0

N/A

0

0

N/A

0

0

Avg. service rev. per MRM subscriber ($/month)

18.2

18.0

1.3

18.2

17.7

3.1

18.2

18.3

Cash flow/balance sheet data

Operating cash flows

3.27

1.43

129.0

6.00

6.39

(6.0)

1.51

1.22

Cash conversion (operating CF to EBIT, %)

112.6

102.1

N/A

75.1

138.0

N/A

66.7

43.2

Cash flows from investment

(0.85)

(0.69)

23.2

(1.90)

(3.07)

(38.0)

(0.75)

(0.31)

Purchases of property, plant and equipment

(0.88)

(0.72)

22.2

(1.99)

(3.58)

(44.5)

(0.77)

(0.34)

Cash & cash equivalents

7.00

14.07

(50.2)

7.00

14.07

(50.2)

5.75

5.70

Net debt ($m)

4.57

2.23

105.1

4.57

2.23

105.1

8.06

7.04

Net debt (cash)/equity (%)

8.76

5.17

N/A

8.76

5.17

N/A

17.20

14.11

Current ratio

1.42

1.90

N/A

1.42

1.90

N/A

1.32

1.41

Quick ratio

1.13

1.62

N/A

1.13

1.62

N/A

1.05

1.12

Source: Pointer Telocation, Edison Investment Research

Third quarter results were boosted by an increase in organic mobile resource management (MRM) subscriber additions during the quarter from a quarterly average of 8,500 in H117 to 10,000 in Q3. Stripping out the effect of the 16,000 additions from the Cielo Telecom acquisition in Brazil in Q416 (adding them to the historical base of 198k) gives rise to 16% organic growth in subscriber numbers to 249k. Including these subscribers, customer growth reached 26% y-o-y.

Despite the addition of new lower ARPU (average service revenue per MRM subscriber) ride hail driver monitoring customers in the US, the average service revenue per user (ARPU) of $18.2 was in line with the previous two quarters (see Exhibit 3), indicating a positive underlying trend in revenues from the core base. This fed through to a 27% y-o-y increase in service revenues to $13.3m and a 34% increase in gross profit from the services business to $7.7m. This was on the back of a 3.0 basis point increase in gross margin on service revenues to 57.5%, reflecting the benefit of high operating gearing arising from the group’s cloud-based SaaS model.

Exhibit 2: Organic MRM subscriber additions

Exhibit 3: Service revenue per MRM subscriber

Source: Pointer Telocation

Source: Pointer Telocation, Edison Investment Research

Exhibit 2: Organic MRM subscriber additions

Source: Pointer Telocation

Exhibit 3: Service revenue per MRM subscriber

Source: Pointer Telocation, Edison Investment Research

Product revenues dipped on seasonal factors versus Q2 but gained 28% y-o-y to $6.9m with the benefit of increased sales of the higher-quality telematics unit. This also had a positive impact on the gross margin from product sales, rising 3.5 basis points during the quarter to 40.9%, as it enabled the group to avoid the worst effects of severe price competition at the low-quality end of the market.

The group reported strong interest in the CelloTrack Nano and connected car products during the quarter, indicating a likely boost to revenues in 2018. We nevertheless understand that the impact on total product revenues during the quarter was not significant.

Continued focus on cost control led to a 71% increase in normalised operating profit to $3.1m. This fed through a 97% yoy increase in normalised PBT to $2.8m, and a 90% y-o-y increase in basic, normalised EPS to $0.26.

Cash conversion rates also increased sharply during the quarter, helped by lower working capital requirements, reaching 113% in the third quarter after 43% in Q2. Helped by the strong cash generation, net debt levels fell from $7.0m to $4.6m over the quarter (see Exhibit 1).

Exhibit 4: Quarterly earnings summary

$m

Q317

Q316

Change
y-o-y (%)

9M17

9M16

Change
y-o-y (%)

Q117

Q217

Product revenues

6.90

5.39

27.8

20.73

16.95

22.3

6.68

7.15

Change (%)

27.8

6.0

N/A

22.3

1.9

N/A

21.3

18.2

Services revenues

13.34

10.52

26.7

38.58

30.01

28.6

12.35

12.89

Change (%)

26.7

11.1

N/A

28.6

4.1

N/A

32.5

26.8

Revenue

20.23

15.92

27.1

59.30

46.96

26.3

19.03

20.04

Change (%)

27.1

9.3

N/A

26.3

3.3

N/A

28.4

23.6

Cost of products

(4.08)

(3.30)

23.5

(12.83)

(10.48)

22.4

(4.28)

(4.48)

Gross profit products

2.82

2.09

34.6

7.9

6.5

22.0

2.41

2.67

Gross margin products (%)

40.9

38.8

N/A

38.1

38.2

N/A

36.0

37.4

Cost of Services

(5.67)

(4.79)

18.5

(16.29)

(13.56)

20.1

(5.36)

(5.26)

Gross profit Services

7.66

5.73

33.7

22.3

16.4

35.5

6.99

7.64

Gross margin services (%)

57.5

54.5

N/A

57.8

54.8

N/A

56.6

59.2

Cost of Sales

(9.75)

(8.09)

20.5

(29.13)

(24.04)

21.1

(9.64)

(9.74)

Gross profit

10.48

7.83

33.9

30.18

22.91

31.7

9.39

10.31

Gross margin (%)

51.8

49.2

N/A

50.9

48.8

N/A

49.4

51.4

Research and development

(1.04)

(0.87)

19.2

(3.02)

(2.69)

12.2

(0.97)

(1.02)

% of sales

5.1

5.5

N/A

5.1

5.7

N/A

5.1

5.1

Selling and marketing

(3.60)

(3.10)

16.1

(10.36)

(8.71)

18.9

(3.31)

(3.46)

% of sales

17.8

19.5

N/A

17.5

18.6

N/A

17.4

17.2

General and administrative

(2.83)

(2.15)

31.4

(8.46)

(6.38)

32.6

(2.75)

(2.89)

% of sales

14.0

13.5

N/A

14.3

13.6

N/A

14.4

14.4

EBITDA (norm. /continuing operations)

3.68

2.23

65.0

10.44

6.66

56.7

3.22

3.54

EBITDA margin

18.2%

14.0%

N/A

17.6%

14.2%

N/A

16.9%

17.7%

Operating profit normalised

3.10

1.82

70.7

8.63

5.33

61.9

2.48

3.05

Operating margin normalised

15.3%

11.4%

N/A

14.6%

11.4%

N/A

13.0%

15.2%

One-off items

0.00

(0.20)

(100.0)

0.00

(0.20)

(100.0)

0.00

0.00

Operating profit

2.91

1.40

107.6

8.00

4.63

72.8

2.26

2.83

Operating margin (%)

14.36

8.80

N/A

13.48

9.85

N/A

11.85

14.14

Net finance costs

(0.29)

(0.38)

(23.9)

(0.71)

(0.62)

13.8

(0.16)

(0.26)

Other expenses

0.00

(0.01)

(150.0)

0.00

(0.00)

(200.0)

0.00

0.00

PBT normalised

2.82

1.43

97.1

7.93

4.71

68.5

2.32

2.79

PBT

2.62

1.01

158.8

7.29

4.00

82.3

2.10

2.57

Reported tax

(0.74)

(0.30)

148.0

(1.88)

(1.15)

62.9

(0.53)

(0.61)

Profit after tax reported

1.88

0.71

163.3

5.42

3.00

80.3

1.57

1.97

Profit after tax normalised

2.08

1.07

94.3

6.05

3.52

72.2

1.79

2.18

EPS - basic ($)

0.24

0.09

159.0

0.68

0.38

77.1

0.20

0.24

EPS - diluted ($)

0.23

0.09

157.8

0.67

0.38

77.5

0.20

0.24

EPS - basic normalised ($)

0.26

0.14

90.4

0.76

0.46

66.7

0.23

0.27

EPS - diluted normalised ($)

0.25

0.13

89.5

0.75

0.45

67.0

0.22

0.27

Source: Pointer Telocation


Changes in forecasts

We have increased our earnings forecasts for the group, as shown in Exhibit 5. The key drivers of the changes are:

■

The addition of 2,400 MRM subscribers in early Q417 from an acquisition in South Africa announced on 2 October.

■

Positive subscriber and margin growth developments in the third quarter, leading us to increase year end MRM organic subscriber additions by a further 3,600 and to increase total MRM subscriptions in 2018 by 9,000, or 3.1%.

■

The impact of ongoing operational gearing on the increase in the subscriber base has led us to increase our gross margin forecast by 0.6% points over the forecast period.

■

Management has announced expectations of significant additional costs savings to be derived in 2018 from the full integration of the operations of Cielo Telecom in Brazil, which was acquired in Q416. No more detailed guidance was offered on this topic, but we have assumed savings of $0.3m from G&A costs 2018 to reflect the scale of the Brazilian operation.

Exhibit 5: Pointer Telocation – change in earnings forecast summary

$m

2016

9M17

2017

2017

 

2018

2018

 

2019

2019

 

 

 

Old

New

% chg.

Old

New

% chg.

Old

New

% chg.

MRM subscribers ('000)

222

249

254

260

2.4

287

296

3.1

316

326

3.1

MRM ARPU ($/month)

17.6

18.2

18.2

18.1

(0.4)

17.7

17.7

(0.0)

17.3

17.3

(0.1)

Service revenues

41.6

38.6

51.9

52.4

0.9

57.6

59.2

2.7

62.6

64.5

3.0

Product revenues

22.8

20.7

26.9

26.9

0.0

28.9

29.7

2.8

31.2

32.1

2.8

Revenue

64.4

59.3

78.8

79.3

0.6

86.5

88.9

2.7

93.9

96.7

3.0

Revenue growth (%)

6.3

26.3

22.5

23.2

N/A

9.8

11.9

N/A

8.5

8.7

N/A

Gross profit

31.8

30.2

39.9

40.6

1.7

44.4

46.1

3.9

48.4

50.4

4.1

Gross margin (%)

49.4

50.9

50.6

51.2

N/A

51.3

51.9

N/A

51.5

52.1

N/A

Research and development

(3.7)

(3.0)

(4.1)

(4.1)

0.0

(4.5)

(4.5)

0.0

(4.9)

(4.9)

0.2

Selling and marketing

(11.8)

(10.4)

(14.0)

(14.0)

0.6

(15.3)

(15.7)

2.7

(16.6)

(17.1)

3.0

General and administrative

(9.0)

(8.5)

(11.8)

(11.6)

(1.7)

(13.4)

(13.1)

(2.8)

(15.0)

(14.6)

(2.8)

Non-cash adjustments/other

2.4

2.1

3.3

2.9

(10.2)

3.8

3.5

(7.5)

4.3

4.1

(5.6)

EBITDA*

9.8

10.4

13.3

13.8

3.6

15.0

16.4

9.3

16.2

17.9

10.3

EBITDA growth (%)

N/A

N/A

36.8

41.8

N/A

12.2

18.4

N/A

8.5

9.4

N/A

EBITDA margin (%)

15.2

17.6

16.9

17.4

N/A

17.3

18.4

N/A

17.3

18.5

N/A

Operating profit normalised

7.6

8.6

10.5

11.3

7.7

11.6

13.3

14.5

12.4

14.3

15.4

Operating profit reported

6.2

8.0

9.6

10.4

8.4

10.8

12.5

15.6

11.6

13.5

16.4

Operating margin norm. (%)

11.9

14.6

13.3

14.3

N/A

13.4

14.9

N/A

13.2

14.8

N/A

Finance costs

(1.0)

(0.7)

(0.9)

(1.0)

11.1

(0.5)

(0.6)

20.1

(0.2)

(0.3)

31.2

Profit before tax normalised

6.6

7.9

9.6

10.3

7.4

11.1

12.7

14.2

12.1

13.9

15.1

Profit before tax reported

5.2

7.3

8.7

9.4

8.2

10.3

11.9

15.3

11.4

13.2

16.1

PBT growth (%)

N/A

N/A

68.1

81.8

N/A

17.9

25.7

N/A

10.6

11.3

N/A

EPS - diluted normalised ($)

0.62

0.75

0.91

0.96

5.5

1.03

1.16

12.5

1.11

1.25

13.4

EPS - basic reported ($)

0.44

0.68

0.82

0.88

6.3

0.96

1.09

13.8

1.05

1.20

14.5

Source: Pointer Telocation, Edison Investment Research. Note: *Normalised and before share-based payments.


Valuation review

Exhibit 6: Peer valuation comparison

$m

Main focus

Share price (lc)

Market cap ($m)

Sales FY1 (m)

EBITDA margin 1FY (%)

EV/ sales 1FY (x)

EV/ sales 2FY (x)

EV/ EBITDA 1FY (x)

EV/ EBITDA 2FY (x)

P/E 1FY (x)

P/E 2FY (x)

Last div yield

Net debt (cash)/
equity

Pointer Telocation

Isr, LA, SA

17.8

143

79

17.4

1.9

1.7

10.7

9.0

18.6

15.4

0.0

21.0

CalAmp Corp

NAM

22.1

787

362

14.7

2.2

2.1

15.1

13.2

18.9

16.5

0.0

12.2

ID Systems Inc

NAM

6.8

118

41

(0.1)

2.7

1.9

(2,270

15.5

(250.7)

18.3

0.0

(42.7)

Ituran

Isr, Brzl, Arg

35.3

739

237

28.8

3.0

2.8

10.4

9.2

17.2

16.4

2.4

(32.6)

MiX Telematics Ltd

SA

160.6

277

1,676

24.7

2.1

2.0

8.7

7.5

111.4

95.0

N/A

(17.8)

Numerex Corp

NAM

3.7

73

66

9.1

1.3

1.2

13.8

7.7

(9.3)

(185.0)

0.0

19.7

ORBCOMM Inc

US/Europe

10.3

762

249

19.2

3.9

3.5

20.4

15.0

(12.5)

(80.1)

0.0

74.1

Sierra Wireless Inc

NAM

20.7

667

685

7.8

0.9

0.8

11.7

10.3

20.1

18.4

0.0

(11.1)

Trakm8 Holdings

UK

1.4

65

32

14.7

1.7

1.5

11.2

8.7

19.1

13.8

0.0

19.1

QUALCOMM Inc

NAM

68.1

100,435

22,920

30.0

3.7

3.5

12.2

13.3

19.0

17.8

3.2

(54.3)

Quartix Holdings PLC

UK

3.6

228

23

29.6

7.2

6.8

24.4

21.2

30.8

27.1

1.8

(26.1)

Median

277

237

17.4

2.2

2.0

11.7

10.3

18.9

16.5

0.0%

(11.1)

Average/Median* - MCAP<$300m

151

310

16.1

2.0

1.8

11.0

8.9

18.8

16.8

0.0%

0.7

Average/Median* Ituran/MiX Telematics

508

956

26.8

2.6

2.4

9.5

8.4

64.3

55.7

N/A

(25.2)

PTNR premium/(discount) to peers

(16.2)

(16.5)

(8.4)

(12.1)

(1.7)

(7.1)

N/A

N/A

PTNR premium/(discount) to peers MCAP<$300m

(6.9)

(6.3)

(2.5)

1.8

(1.4)

(8.7)

N/A

N/A

PTNR premium/(discount) to Ituran/MiX Telematics average

(27.4)

(30.6)

12.1

8.0

(71.1)

(72.4)

N/A

N/A

PTNR premium/(discount) to Ituran

(37.8)

(40.6)

2.6

(1.6)

8.1

(6.2)

N/A

N/A

Source: Edison Investment Research, Bloomberg. Note: *Applying median to valuation ratios to eliminate outliers, averages to all else.

Priced as at 23 November 2017.

We have updated our peer group valuation for the increases to our earnings forecasts and changes in pricing in the sector as well as our perception of the improvement in earnings quality at the company. The result is an increase our multiple-based valuation from $15.4 (NIS55.1) to $19.3 (NIS67.8) per share since our last update (Right time, right places, 11 September 2017).

As mentioned above, we believe that the strong interest being generated by the group’s CelloTrack Nano IoT device as well as the Connected Car offering and US Ride Hail driver monitoring devices substantially increase the likelihood of the group benefiting strongly from fast-moving market segments, particularly the current advanced driver-assistance systems (ADAS) and IoT revolution. We also expect the creation of multiple product streams to underpin future top-line growth, while high operational gearing from the SaaS model and synergies from acquisitions should enable further margin gains. We also note that the group is generating strong cash flows, which should either steadily reduce gearing levels to make it more comparable with the sector, where net cash positions are common, or enable more value-accretive acquisitions.

In view of this, we have reduced the discount to peers used in our peer valuation from 10% to 7%. Applying this discount to the EV/EBITDA average sector multiples for FY1 and FY2, together with higher earnings expectations, has led to an increase in our peer based valuation from $15.4 (NIS55.1) to $19.3 (NIS67.8) per share.

Exhibit 7: Pointer Telocation DCF model

$m

2016

2017e

2018e

2019e

2020e

2021e

2022e

2023e

2024e

2025e

2026e norm.

Revenue

64.4

79.3

88.9

96.7

102.0

107.5

112.6

117.6

122.9

128.5

131.7

change y-o-y (%)

6.3

23.2

11.9

8.7

5.6

5.3

4.7

4.5

4.5

4.6

2.5

EBITDA

9.8

13.8

16.4

17.9

19.6

21.5

23.2

24.5

25.8

27.2

27.9

EBITDA margin (%)

15.2

17.4

18.4

18.5

19.2

20.0

20.6

20.8

21.0

21.2

21.2

change y-o-y (%)

10.9

41.8

17.7

9.4

9.4

9.8

7.8

5.7

5.5

5.2

2.5

Change in working capital

1.1

(0.5)

(0.3)

(0.2)

(0.2)

(0.2)

(0.2)

(0.2)

(0.2)

(0.2)

(0.2)

Working capital/sales (%)

1.7

(0.6)

(0.3)

(0.2)

(0.2)

(0.2)

(0.2)

(0.1)

(0.1)

(0.1)

(0.1)

Capex, net of PPE sales

(3.5)

(4.4)

(4.9)

(5.3)

(5.7)

(6.1)

(6.5)

(6.8)

(7.2)

(7.6)

(8.0)

Capex/sales (%)

(5.4)

(5.5)

(5.5)

(5.5)

(5.6)

(5.7)

(5.8)

(5.8)

(5.9)

(5.9)

(5.9)

Tax

(0.1)

(1.4)

(1.5)

(3.4)

(3.8)

(4.2)

(4.5)

(4.7)

(5.0)

(5.2)

(5.0)

Acquisitions

(8.6)

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Free cash flow

(1.4)

7.6

9.6

8.9

9.9

11.0

12.0

12.8

13.5

14.2

14.7

Terminal value

 

 

 

 

 

 

 

 

 

 

196.6

Total cash flow

(1.4)

7.6

9.6

8.9

9.9

11.0

12.0

12.8

13.5

14.2

211.3

Discounted cash flows

0.0

7.6

8.7

7.3

7.4

7.5

7.4

7.1

6.9

6.5

88.4

Sum of discounted CFs

154.8

 

RFR

 

 

6.6%

 

 

 

 

 

Net debt (cash)

9.0

 

WACC

 

 

10.2%

 

 

 

 

 

Equity valuation

145.9

 

Terminal growth rate

 

2.5%

 

 

 

 

 

Number of shares, diluted

8.1

 

Terminal value/EV

 

53%

 

 

 

 

 

Value per share (NIS)

63.6

 

Value per share ($)

 

18.1

 

 

 

 

 

Source: Edison Investment Research

As a result of the increase in our earnings expectations, our DCF share value for Pointer Telocation has increased from $16.3 (NIS58.2) to $18.1 (NIS63.6) per share. We have left our WACC and terminal value assumptions unchanged.

Exhibit 8: Financial summary

$'m

2015

2016

2017e

2018e

2019e

31 December

US GAAP

US GAAP

US GAAP

US GAAP

US GAAP

INCOME STATEMENT

Revenue

 

 

60.57

64.35

79.28

88.91

96.65

Cost of Sales

(31.31)

(32.58)

(38.68)

(42.79)

(46.29)

Gross Profit

29.25

31.78

40.61

46.13

50.36

EBITDA

 

 

8.80

9.75

13.83

16.37

17.91

Normalised operating profit

 

 

7.10

7.64

11.33

13.28

14.27

Amortisation of acquired intangibles

(0.54)

(0.47)

(0.46)

(0.36)

(0.29)

Exceptionals

(0.91)

(0.60)

0.00

0.00

0.00

Share-based payments (incl. in COGS)

(0.31)

(0.32)

(0.43)

(0.43)

(0.44)

Reported operating profit

5.34

6.25

10.44

12.48

13.54

Net Interest

(0.73)

(1.05)

(1.00)

(0.61)

(0.33)

Joint ventures & associates (post tax)/other

(0.01)

(0.01)

0.00

0.00

0.00

Exceptionals

0.00

0.00

0.00

0.00

0.00

Profit before tax (norm)

 

 

6.36

6.58

10.33

12.67

13.94

Profit before tax (reported)

 

 

4.60

5.19

9.44

11.87

13.21

Reported tax

(1.13)

(1.85)

(2.48)

(3.09)

(3.43)

Profit after tax (norm)

5.23

4.93

7.84

9.58

10.50

Profit after tax (reported)

3.47

3.35

6.96

8.79

9.78

Minority interests

0.08

(0.02)

(0.04)

(0.05)

(0.05)

Discontinued operations

0.33

0.15

0.00

0.00

0.00

Net income (normalised)

5.30

4.91

7.80

9.53

10.45

Net income (reported)

3.87

3.48

6.92

8.74

9.72

Basic average number of shares outstanding (m)

7.73

7.82

7.91

7.99

8.09

EPS – basic normalised ($)

 

 

0.69

0.63

0.99

1.19

1.29

EPS – diluted normalised ($)

 

 

0.67

0.62

0.96

1.16

1.25

EPS – basic reported ($)

 

 

0.50

0.44

0.88

1.09

1.20

Dividend ($)

0.00

0.00

0.00

0.00

0.00

Revenue growth (%)

N/A

6.25

23.20

12.15

8.70

Gross margin (%)

48.30

49.38

51.22

51.88

52.11

EBITDA margin (%)

14.52

15.16

17.44

18.41

18.53

Normalised operating margin (%)

11.71

11.87

14.29

14.93

14.76

BALANCE SHEET

Fixed assets

 

 

68.78

51.61

53.00

54.46

55.87

Intangible assets

31.83

40.29

39.83

39.47

39.18

Tangible assets

3.28

5.61

7.47

9.28

10.98

Investments & other

33.67

5.71

5.71

5.71

5.71

Current assets

 

 

34.66

25.28

28.70

36.42

47.07

Stocks

4.70

5.24

6.22

6.89

7.45

Debtors

9.49

11.46

14.12

15.84

17.22

Cash & cash equivalents

7.25

6.07

5.77

11.04

19.66

Other

13.21

2.50

2.58

2.66

2.74

Current liabilities

 

 

(30.45)

(19.83)

(22.11)

(23.47)

(25.26)

Creditors

(9.82)

(13.96)

(16.96)

(18.94)

(20.61)

Short-term borrowings

(4.82)

(4.84)

(3.87)

(3.10)

(3.10)

Other

(15.81)

(1.04)

(1.28)

(1.43)

(1.56)

Long-term liabilities

 

 

(17.95)

(14.36)

(8.09)

(4.80)

(4.55)

Long-term borrowings

(8.39)

(10.18)

(4.23)

(1.23)

(1.23)

Other long-term liabilities

(9.57)

(4.18)

(3.86)

(3.57)

(3.31)

Net assets

 

 

55.04

42.69

51.50

62.60

73.13

Minority interests

1.07

(0.16)

(0.20)

(0.25)

(0.30)

Shareholders' equity

 

 

56.10

42.53

51.30

62.35

72.83

CASH FLOW

Operating cash flow before WC and tax

8.80

9.75

13.83

16.37

17.91

Working capital

0.77

1.08

(0.47)

(0.32)

(0.23)

Exceptional & other

1.99

(1.62)

0.00

0.00

0.00

Tax

(0.05)

(0.12)

(1.42)

(1.54)

(3.43)

Net operating cash flow

 

 

11.51

9.09

11.94

14.51

14.25

Capex

(3.62)

(4.13)

(4.73)

(5.34)

(5.81)

Acquisitions/disposals

0.00

(8.65)

0.00

0.00

0.00

Net interest

(0.89)

0.00

(1.00)

(0.61)

(0.33)

Equity financing

0.02

0.10

0.00

0.00

0.00

Dividends

0.00

0.00

0.00

0.00

0.00

Other, incl.PPE sales

1.26

1.05

0.42

0.47

0.52

Net cash flow

8.28

(2.54)

6.62

9.04

8.63

Opening net debt/(cash)

 

 

11.90

5.95

8.95

2.33

(6.71)

FX

(0.71)

(0.46)

0.00

0.00

0.00

Other non-cash movements

(1.61)

0.00

0.00

0.00

0.00

Closing net debt/(cash)

 

 

5.95

8.95

2.33

(6.71)

(15.34)

Source: Pointer Telocation accounts, Edison Investment Research

Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world-renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisers and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting. Edison is authorised and regulated by the Financial Conduct Authority. Edison Investment Research (NZ) Limited (Edison NZ) is the New Zealand subsidiary of Edison. Edison NZ is registered on the New Zealand Financial Service Providers Register (FSP number 247505) and is registered to provide wholesale and/or generic financial adviser services only. Edison Investment Research Inc (Edison US) is the US subsidiary of Edison and is regulated by the Securities and Exchange Commission. Edison Investment Research Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison and is not regulated by the Australian Securities and Investment Commission. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

EDISON ISRAEL DISCLAIMER

Disclosure regarding the scheme to enhance the awareness of investors to public companies in the technology and biomed sectors that are listed on the Tel Aviv Stock Exchange and participate in the scheme (hereinafter respectively “the Scheme”, “TASE”, “Participant” and/or “Participants”). Edison Investment Research (Israel) Ltd, the Israeli subsidiary of Edison Investment Research Ltd (hereinafter respectively “Edison Israel” and “Edison”), has entered into an agreement with the TASE for the purpose of providing research analysis (hereinafter “the Agreement”), regarding the Participants and according to the Scheme (hereinafter “the Analysis” or “Analyses”). The Analysis will be distributed and published on the TASE website (Maya), Israel Security Authority (hereinafter “the ISA”) website (Magna), and through various other distribution channels. The Analysis for each participant will be published at least four times a year, after publication of quarterly or annual financial reports, and shall be updated as necessary after publication of an immediate report with respect to the occurrence of a material event regarding a Participant. As set forth in the Agreement, Edison Israel is entitled to fees for providing its investment research services. The fees shall be paid by the Participants directly to the TASE, and TASE shall pay the fees directly to Edison. Subject to the terms and principals of the Agreement, the Annual fees that Edison Israel shall be entitled to for each Participant shall be in the range of $35,000-50,000. As set forth in the Agreement and subject to its terms, the Analyses shall include a description of the Participant and its business activities, which shall inter alia relate to matters such as: shareholders; management; products; relevant intellectual property; the business environment in which the Participant operates; the Participant's standing in such an environment including current and forecasted trends; a description of past and current financial positions of the Participant; and a forecast regarding future developments in and of such a position and any other matter which in the professional view of the Edison (as defined below) should be addressed in a research report (of the nature published) and which may affect the decision of a reasonable investor contemplating an investment in the Participant's securities. To the extent it is relevant, the Analysis shall include a schedule of scientific analysis of an expert in the field of life sciences. An "equity research abstract" shall accompany each Equity Research Report, describing the main points addressed. The full scope reports and reports where the investment case has materially changed will include a thorough analysis and discussion. Short update notes, where the investment case has not materially changed, will include a summary valuation discussion. The Agreement with TASE regarding the participation of Edison in the scheme for the research analysis of public companies does not and shall not constitute an approval or consent on the part of TASE or the ISA or any other exchange on which securities of the Company are listed, or any other securities’ regulatory authority which regulates the issuance of securities by the Company to the content of the Report or to the recommendation contained therein. A summary of this report is also published in the Hebrew language. In the event of any contradiction, inconsistency, discrepancy, ambiguity or variance between the English Report and the Hebrew summary of said Report, the English version shall prevail; and a note to this effect shall appear in any Hebrew summary of a Report. Edison is regulated by the Financial Conduct Authority. According to Article 12.3.2, Chapter 12 of the Conduct of Business Sourcebook, Edison, which produces or disseminates non-independent research, must ensure that it: 1) is clearly identified as a marketing communication; and 2) contains a clear and prominent statement that (or, in the case of an oral recommendation, to the effect that) it: a) has not been prepared in accordance with legal requirements designed to promote the independence of investment research; and b) is not subject to any prohibition on dealing ahead of the dissemination of investment research. The financial promotion rules apply to non-independent research as though it were a marketing communication.

EDISON INVESTMENT RESEARCH DISCLAIMER

Copyright 2017 Edison Investment Research Limited. All rights reserved. This report has been prepared and issued by Edison for publication globally. All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Investments Pty Ltd (Corporate Authorised Representative (1252501) of Myonlineadvisers Pty Ltd (AFSL: 427484)) and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. This document is provided for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research. Edison has a restrictive policy relating to personal dealing. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (ie without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited (“FTSE”) © FTSE 2017. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Tel Aviv +44 (0)20 3734 1007
Medinat Hayehudim 60

Herzilya Pituach, 46766

Israel

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Tel Aviv +44 (0)20 3734 1007
Medinat Hayehudim 60

Herzilya Pituach, 46766

Israel

Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world-renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisers and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting. Edison is authorised and regulated by the Financial Conduct Authority. Edison Investment Research (NZ) Limited (Edison NZ) is the New Zealand subsidiary of Edison. Edison NZ is registered on the New Zealand Financial Service Providers Register (FSP number 247505) and is registered to provide wholesale and/or generic financial adviser services only. Edison Investment Research Inc (Edison US) is the US subsidiary of Edison and is regulated by the Securities and Exchange Commission. Edison Investment Research Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison and is not regulated by the Australian Securities and Investment Commission. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

EDISON ISRAEL DISCLAIMER

Disclosure regarding the scheme to enhance the awareness of investors to public companies in the technology and biomed sectors that are listed on the Tel Aviv Stock Exchange and participate in the scheme (hereinafter respectively “the Scheme”, “TASE”, “Participant” and/or “Participants”). Edison Investment Research (Israel) Ltd, the Israeli subsidiary of Edison Investment Research Ltd (hereinafter respectively “Edison Israel” and “Edison”), has entered into an agreement with the TASE for the purpose of providing research analysis (hereinafter “the Agreement”), regarding the Participants and according to the Scheme (hereinafter “the Analysis” or “Analyses”). The Analysis will be distributed and published on the TASE website (Maya), Israel Security Authority (hereinafter “the ISA”) website (Magna), and through various other distribution channels. The Analysis for each participant will be published at least four times a year, after publication of quarterly or annual financial reports, and shall be updated as necessary after publication of an immediate report with respect to the occurrence of a material event regarding a Participant. As set forth in the Agreement, Edison Israel is entitled to fees for providing its investment research services. The fees shall be paid by the Participants directly to the TASE, and TASE shall pay the fees directly to Edison. Subject to the terms and principals of the Agreement, the Annual fees that Edison Israel shall be entitled to for each Participant shall be in the range of $35,000-50,000. As set forth in the Agreement and subject to its terms, the Analyses shall include a description of the Participant and its business activities, which shall inter alia relate to matters such as: shareholders; management; products; relevant intellectual property; the business environment in which the Participant operates; the Participant's standing in such an environment including current and forecasted trends; a description of past and current financial positions of the Participant; and a forecast regarding future developments in and of such a position and any other matter which in the professional view of the Edison (as defined below) should be addressed in a research report (of the nature published) and which may affect the decision of a reasonable investor contemplating an investment in the Participant's securities. To the extent it is relevant, the Analysis shall include a schedule of scientific analysis of an expert in the field of life sciences. An "equity research abstract" shall accompany each Equity Research Report, describing the main points addressed. The full scope reports and reports where the investment case has materially changed will include a thorough analysis and discussion. Short update notes, where the investment case has not materially changed, will include a summary valuation discussion. The Agreement with TASE regarding the participation of Edison in the scheme for the research analysis of public companies does not and shall not constitute an approval or consent on the part of TASE or the ISA or any other exchange on which securities of the Company are listed, or any other securities’ regulatory authority which regulates the issuance of securities by the Company to the content of the Report or to the recommendation contained therein. A summary of this report is also published in the Hebrew language. In the event of any contradiction, inconsistency, discrepancy, ambiguity or variance between the English Report and the Hebrew summary of said Report, the English version shall prevail; and a note to this effect shall appear in any Hebrew summary of a Report. Edison is regulated by the Financial Conduct Authority. According to Article 12.3.2, Chapter 12 of the Conduct of Business Sourcebook, Edison, which produces or disseminates non-independent research, must ensure that it: 1) is clearly identified as a marketing communication; and 2) contains a clear and prominent statement that (or, in the case of an oral recommendation, to the effect that) it: a) has not been prepared in accordance with legal requirements designed to promote the independence of investment research; and b) is not subject to any prohibition on dealing ahead of the dissemination of investment research. The financial promotion rules apply to non-independent research as though it were a marketing communication.

EDISON INVESTMENT RESEARCH DISCLAIMER

Copyright 2017 Edison Investment Research Limited. All rights reserved. This report has been prepared and issued by Edison for publication globally. All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Investments Pty Ltd (Corporate Authorised Representative (1252501) of Myonlineadvisers Pty Ltd (AFSL: 427484)) and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. This document is provided for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research. Edison has a restrictive policy relating to personal dealing. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (ie without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited (“FTSE”) © FTSE 2017. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Tel Aviv +44 (0)20 3734 1007
Medinat Hayehudim 60

Herzilya Pituach, 46766

Israel

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Tel Aviv +44 (0)20 3734 1007
Medinat Hayehudim 60

Herzilya Pituach, 46766

Israel

Research: Industrials

Marshall Motor Holdings — Resetting numbers following leasing sale

Following the recent announcement of dealer portfolio adjustments, and the completion of the strategic disposal of Marshall Leasing, we adjust our forecasts to reflect these events. As previously commented, the leasing deal eliminates MMH’s gross debt and lifts the NAV to £199.5m or 258p per share. It provides financial flexibility to implement the investment programme, including M&A to help mitigate the initial dilution that is seen in FY18e. The dealership closures eliminate losses and reduce turnover by around £40m. Overall, MMH is well positioned as it enters FY18 where market conditions are expected to remain unhelpful.

Continue Reading

Subscribe to Edison

Get access to the very latest content matched to your personal investment style.

Sign up for free