{"id":325,"date":"2021-09-27T01:01:00","date_gmt":"2021-09-27T01:01:00","guid":{"rendered":"https:\/\/bluegemresearch.co.za\/?p=325"},"modified":"2021-09-26T06:17:36","modified_gmt":"2021-09-26T06:17:36","slug":"metrofile-holdings-initiation-of-coverage-boxing-clever","status":"publish","type":"post","link":"https:\/\/v5j22kvl0zh.c.updraftclone.com\/?p=325","title":{"rendered":"Metrofile Holdings &#8211; Initiation of Coverage &#8211; Boxing Clever"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\"><em>Share Code: MFL \u2013 Market Cap: R1.3bn \u2013 PE: 11.6x \u2013 DY: 4.9%<\/em><\/p>\n\n\n\n<div class=\"wp-block-file\"><a href=\"http:\/\/v5j22kvl0zh.c.updraftclone.com\/wp-content\/uploads\/2021\/09\/Metrofile-Holdings_Initiation-of-Coverage.pdf\">Metrofile Holdings &#8211; Initiation of Coverage<\/a><a href=\"http:\/\/v5j22kvl0zh.c.updraftclone.com\/wp-content\/uploads\/2021\/09\/Metrofile-Holdings_Initiation-of-Coverage.pdf\" class=\"wp-block-file__button\" download>Download<\/a><\/div>\n\n\n\n<p class=\"wp-block-paragraph\"><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Business Overview: Dominant domestic document storage player<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Metrofile has the largest share of the South African document storage market with a strong pan-African &amp; Middle Eastern footprint enjoying good margins and attractive growth.<\/li><li>The Group has a long operating history with high returns, strong cash flows and a defendable track record against comparatives.<\/li><\/ul>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Document Storage + Digital Strategy = Evolving business<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>While the global paper sector appears to be slowly contracting by between -1.0~-2.0% y\/y, the document storage market is still growing with net box growth and rising, compounding revenues.<\/li><li>Intuitively, while a piece of paper may only generate revenue <em>once<\/em> when sold, it appears to generate an average of between 14-to-15 years\u2019 worth of revenue when it goes into storage.<\/li><li>Globally &amp; domestically, strong regulatory tailwinds continue to drive the need for secure physical storage while economic activity continues to generate paper that requires this storage.<\/li><li>Metrofile is using this platform, its cash flows &amp; position of trust with clients to grow its services and digital offerings.<\/li><li>Indeed\u2014and likely key to Metrofile\u2019s long-term growth rate\u2014the Group\u2019s management has specifically crafted a digital strategy that, while hard to quantify or value, may offer some exciting prospects as it is executed.<\/li><\/ul>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Forecast, Valuation and Implied Return: Undervalued share<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Using a segmentally-driven DCF to build our SOTPs fair value, we see Metrofile shares as worth c.405cps on an implied EV\/EBITDA of 6.8x (this is a 48% discount to Iron Mountain\u2019s EV\/EBITDA).<\/li><li>Rolling this fair value forward at our CoE, we arrive at a 12m TP of 468cps generating a large 52% implied return.<\/li><li>Given recent takeover approaches that were frustrated by COVID-19, adding a 15~30% control premium to our fair value implies a fair takeover price of between 465cps to 526cps. For this reason, we view MFL shares as holding a long-dated embedded takeover option, however hard to predict or value.<\/li><\/ul>\n\n\n\n<div class=\"wp-block-file\"><a href=\"http:\/\/v5j22kvl0zh.c.updraftclone.com\/wp-content\/uploads\/2021\/09\/Metrofile-Holdings_Initiation-of-Coverage.pdf\">Metrofile Holdings &#8211; Initiation of Coverage<\/a><a href=\"http:\/\/v5j22kvl0zh.c.updraftclone.com\/wp-content\/uploads\/2021\/09\/Metrofile-Holdings_Initiation-of-Coverage.pdf\" class=\"wp-block-file__button\" download>Download<\/a><\/div>\n\n\n\n<p class=\"wp-block-paragraph\"><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Share Code: MFL \u2013 Market Cap: R1.3bn \u2013 PE: 11.6x \u2013 DY: 4.9% Business Overview: Dominant domestic document storage player Metrofile has the largest share of the South African document storage market with a strong pan-African &amp; Middle Eastern footprint enjoying good margins and attractive growth. The Group has a long operating history with high [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[132],"tags":[],"class_list":["post-325","post","type-post","status-publish","format-standard","hentry","category-metrofile-holdings-mfl"],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/v5j22kvl0zh.c.updraftclone.com\/index.php?rest_route=\/wp\/v2\/posts\/325","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/v5j22kvl0zh.c.updraftclone.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/v5j22kvl0zh.c.updraftclone.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/v5j22kvl0zh.c.updraftclone.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/v5j22kvl0zh.c.updraftclone.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=325"}],"version-history":[{"count":1,"href":"https:\/\/v5j22kvl0zh.c.updraftclone.com\/index.php?rest_route=\/wp\/v2\/posts\/325\/revisions"}],"predecessor-version":[{"id":327,"href":"https:\/\/v5j22kvl0zh.c.updraftclone.com\/index.php?rest_route=\/wp\/v2\/posts\/325\/revisions\/327"}],"wp:attachment":[{"href":"https:\/\/v5j22kvl0zh.c.updraftclone.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=325"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/v5j22kvl0zh.c.updraftclone.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=325"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/v5j22kvl0zh.c.updraftclone.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=325"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}