{"id":476,"date":"2023-09-26T01:01:00","date_gmt":"2023-09-26T01:01:00","guid":{"rendered":"https:\/\/bluegemresearch.co.za\/?p=476"},"modified":"2023-09-24T08:26:14","modified_gmt":"2023-09-24T08:26:14","slug":"metrofile-holdings-fy-23-results-great-top-line-growth","status":"publish","type":"post","link":"https:\/\/v7l6z8c7j6p.c.updraftclone.com\/?p=476","title":{"rendered":"Metrofile Holdings &#8211; FY 23 Results &#8211; Great Top-line Growth"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\"><em>Share Code: MFL \u2013 Market Cap: R1.3bn \u2013 PE: 9.3x \u2013 DY: 6.0%<\/em><\/p>\n\n\n\n<div class=\"wp-block-file\"><a id=\"wp-block-file--media-0a633cf5-cade-44b9-bcd7-041db390e8ba\" href=\"http:\/\/v7l6z8c7j6p.c.updraftclone.com\/wp-content\/uploads\/2023\/09\/Metrofile-Holdings_FY_23_Results-Note.pdf\"><strong>Metrofile Holdings &#8211; FY 23 Results Note<\/strong><\/a><a href=\"http:\/\/v7l6z8c7j6p.c.updraftclone.com\/wp-content\/uploads\/2023\/09\/Metrofile-Holdings_FY_23_Results-Note.pdf\" class=\"wp-block-file__button wp-element-button\" download aria-describedby=\"wp-block-file--media-0a633cf5-cade-44b9-bcd7-041db390e8ba\">Download<\/a><\/div>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>FY 23 Results: Double-digit Organic Growth<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Metrofile revenue grew per our forecasts at +16% y\/y (+3% added via the consolidation of IronTree for the full period and, importantly, +13% of this growth was organic in nature) but EBITDA was slightly lighter than we expected at R345m (FY 22: R325m) as inflationary pressure, the full cost of the prior year\u2019s established go-to-market team was carried and necessary IT upgrades were all carried in these results.<\/li>\n\n\n\n<li>The Group bought back 10m shares, helping HEPS grow +5% y\/y to 32.1cps (FY 22: 30.8cps) and the dividend was maintained at 18cps (FY 22: 18cps).<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Our Thoughts: Two Large, Near-term Contract Wins Offer Upside<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The Group\u2019s MRM South Africa and MRM Middle East both won <em>significant<\/em> contracts during the period. While the South African one\u2019s timing is hard to know (we have excluded it from our forecasts), the Middle Eastern contract should start generating revenue from the end of FY 24E (included in our forecasts from the start of FY 25E).<\/li>\n\n\n\n<li><strong>Note<\/strong>: These two contracts <em>alone<\/em> add c.+20% to Group annual revenues for the periods they occur, we cannot understate how significant they (and their timing) are to Metrofile\u2019s next couple of financial years.<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Forecast, Valuation and Implied Return: Inexpensive quality<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>We see Metrofile\u2019s fair value as 423cps (previously: 426cps), implying an EV\/EBITDA of 7.4x &amp; a PE of 13.2x (comparing attractively to Iron Mountain\u2019s current EV\/EBITDA of 16.1x &amp; PE of 47.8x).<\/li>\n\n\n\n<li>Rolling our fair value forward, we arrive at a 12m TP of 500cps (previously: 496cps), implying an attractive c.65% return (including dividends) from these levels.<\/li>\n\n\n\n<li>Given the fast growth in Digital Services over the period and the significant premium these businesses trade at in public markets, we are increasingly expecting some sort of inflection points in the coming years where Metrofile\u2019s valuation starts to reflect the growing percentage of revenue coming from Digital Services.<\/li>\n<\/ul>\n\n\n\n<div class=\"wp-block-file\"><a id=\"wp-block-file--media-0a633cf5-cade-44b9-bcd7-041db390e8ba\" href=\"http:\/\/v7l6z8c7j6p.c.updraftclone.com\/wp-content\/uploads\/2023\/09\/Metrofile-Holdings_FY_23_Results-Note.pdf\"><strong>Metrofile Holdings &#8211; FY 23 Results Note<\/strong><\/a><a href=\"http:\/\/v7l6z8c7j6p.c.updraftclone.com\/wp-content\/uploads\/2023\/09\/Metrofile-Holdings_FY_23_Results-Note.pdf\" class=\"wp-block-file__button wp-element-button\" download aria-describedby=\"wp-block-file--media-0a633cf5-cade-44b9-bcd7-041db390e8ba\">Download<\/a><\/div>\n","protected":false},"excerpt":{"rendered":"<p>Share Code: MFL \u2013 Market Cap: R1.3bn \u2013 PE: 9.3x \u2013 DY: 6.0% FY 23 Results: Double-digit Organic Growth Our Thoughts: Two Large, Near-term Contract Wins Offer Upside Forecast, Valuation and Implied Return: Inexpensive quality<\/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":[13,148,15,133,147,60,20,30,16],"class_list":["post-476","post","type-post","status-publish","format-standard","hentry","category-metrofile-holdings-mfl","tag-equity-research","tag-iron-mountain","tag-jse","tag-metrofile","tag-metrofile-holdings","tag-research","tag-small-cap","tag-small-caps","tag-south-africa"],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/v7l6z8c7j6p.c.updraftclone.com\/index.php?rest_route=\/wp\/v2\/posts\/476","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/v7l6z8c7j6p.c.updraftclone.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/v7l6z8c7j6p.c.updraftclone.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/v7l6z8c7j6p.c.updraftclone.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/v7l6z8c7j6p.c.updraftclone.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=476"}],"version-history":[{"count":2,"href":"https:\/\/v7l6z8c7j6p.c.updraftclone.com\/index.php?rest_route=\/wp\/v2\/posts\/476\/revisions"}],"predecessor-version":[{"id":479,"href":"https:\/\/v7l6z8c7j6p.c.updraftclone.com\/index.php?rest_route=\/wp\/v2\/posts\/476\/revisions\/479"}],"wp:attachment":[{"href":"https:\/\/v7l6z8c7j6p.c.updraftclone.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=476"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/v7l6z8c7j6p.c.updraftclone.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=476"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/v7l6z8c7j6p.c.updraftclone.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=476"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}