{"id":355,"date":"2022-03-16T02:29:00","date_gmt":"2022-03-16T02:29:00","guid":{"rendered":"https:\/\/bluegemresearch.co.za\/?p=355"},"modified":"2022-03-15T14:31:54","modified_gmt":"2022-03-15T14:31:54","slug":"metrofile-holdings-tough-period-but-digital-is-growing","status":"publish","type":"post","link":"https:\/\/v5j22kvl0zh.c.updraftclone.com\/?p=355","title":{"rendered":"Metrofile Holdings &#8211; Tough Period but Digital is Growing"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\"><em>Share Code: MFL &#8211; Market Cap.: R1.5bn &#8211; PE: 10.5x &#8211; DY: 4.5%<\/em><\/p>\n\n\n\n<div class=\"wp-block-file\"><a id=\"wp-block-file--media-a984423e-7eb3-4204-bf98-2f88dc3553b1\" href=\"http:\/\/v5j22kvl0zh.c.updraftclone.com\/wp-content\/uploads\/2022\/03\/Metrofile-Holdings_H1_22_Results-Note.pdf\">Metrofile Holdings H1:22 Results Note<\/a><a href=\"http:\/\/v5j22kvl0zh.c.updraftclone.com\/wp-content\/uploads\/2022\/03\/Metrofile-Holdings_H1_22_Results-Note.pdf\" class=\"wp-block-file__button\" download aria-describedby=\"wp-block-file--media-a984423e-7eb3-4204-bf98-2f88dc3553b1\">Download<\/a><\/div>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>H1:22 Results: Tough Period<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Metrofile\u2019s H1:22 period saw domestic riots &amp; elections, the implementation of the POPIA, Kenyan regulatory pressures, COVID lockdowns &amp; supply chains disruptions.<\/li><li>The Group&#8217;s revenue rose +4% y\/y (driven by the Middle East and Digital Services), though margin pressure lowered Operating Profit -2% y\/y.<\/li><li>Strong cash generation allowed the Group to degear further (<em>despite<\/em> acquiring IronTree during this period) &amp; the combination of lower finance charges &amp; a lower effective tax rate (attributable to the Middle East) saw HEPS grow +1% y\/y.<\/li><li>Implementing a new dividend policy, management has hiked the interim dividend by +29% y\/y.<\/li><\/ul>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Our Thoughts: H2:22 Recovery + Digital is Growing<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Many of the headwinds in H1:22 should abate during H2:22E, thus we expect some upside in the coming full FY 22E results.<\/li><li>Already in Q2 management saw box volumes in South Africa recovering while H2:22E should also see a full six month\u2019s consolidation from IronTree (it was only consolidated for a <em>single<\/em> month in H1:22).<\/li><li>Perhaps not obvious at first glance, but Digital Services now contributes 20% of the Group\u2019s revenues. We are extremely bullish on developments in this space and expect Digital Services to be a growing vector in future results.<\/li><\/ul>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Forecast, Valuation and Implied Return: Margin of Safety<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>We see Metrofile\u2019s fair value as 405cps (previously: 428cps), or c.20% higher than its current share price.<\/li><li>Importantly, our fair value of 405cps for Metrofile implies an EV\/EBITDA of 7.1x &amp; a PE of 12.7x, which compares attractively to Iron Mountain\u2019s EV\/EBITDA of 14.6x &amp; PE of 31.1x.<\/li><li>In fact, when compared to Iron Mountain, Metrofile has the same-or-better returns &amp; significantly less gearing.<\/li><li>Rolling the 405cps fair value forward, we arrive at a 12m TP of 472cps (previously: 497cps). This implies an attractive +41% return (including dividends) from these levels.<\/li><\/ul>\n\n\n\n<div class=\"wp-block-file\"><a id=\"wp-block-file--media-f6b89231-068d-4075-97a6-e18bb7c23633\" href=\"http:\/\/v5j22kvl0zh.c.updraftclone.com\/wp-content\/uploads\/2022\/03\/Metrofile-Holdings_H1_22_Results-Note.pdf\">Metrofile Holdings H1:22 Results Note<\/a><a href=\"http:\/\/v5j22kvl0zh.c.updraftclone.com\/wp-content\/uploads\/2022\/03\/Metrofile-Holdings_H1_22_Results-Note.pdf\" class=\"wp-block-file__button\" download aria-describedby=\"wp-block-file--media-f6b89231-068d-4075-97a6-e18bb7c23633\">Download<\/a><\/div>\n","protected":false},"excerpt":{"rendered":"<p>Share Code: MFL &#8211; Market Cap.: R1.5bn &#8211; PE: 10.5x &#8211; DY: 4.5% H1:22 Results: Tough Period Metrofile\u2019s H1:22 period saw domestic riots &amp; elections, the implementation of the POPIA, Kenyan regulatory pressures, COVID lockdowns &amp; supply chains disruptions. The Group&#8217;s revenue rose +4% y\/y (driven by the Middle East and Digital Services), though margin [&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":[13,15,133,60,30,16],"class_list":["post-355","post","type-post","status-publish","format-standard","hentry","category-metrofile-holdings-mfl","tag-equity-research","tag-jse","tag-metrofile","tag-research","tag-small-caps","tag-south-africa"],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/v5j22kvl0zh.c.updraftclone.com\/index.php?rest_route=\/wp\/v2\/posts\/355","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=355"}],"version-history":[{"count":1,"href":"https:\/\/v5j22kvl0zh.c.updraftclone.com\/index.php?rest_route=\/wp\/v2\/posts\/355\/revisions"}],"predecessor-version":[{"id":357,"href":"https:\/\/v5j22kvl0zh.c.updraftclone.com\/index.php?rest_route=\/wp\/v2\/posts\/355\/revisions\/357"}],"wp:attachment":[{"href":"https:\/\/v5j22kvl0zh.c.updraftclone.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=355"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/v5j22kvl0zh.c.updraftclone.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=355"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/v5j22kvl0zh.c.updraftclone.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=355"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}