{"id":565,"date":"2024-10-21T01:01:00","date_gmt":"2024-10-21T01:01:00","guid":{"rendered":"https:\/\/bluegemresearch.co.za\/?p=565"},"modified":"2024-12-13T13:13:49","modified_gmt":"2024-12-13T13:13:49","slug":"metrofile-holdings-fy-24-results-disappointing-but-could-be-the-bottom","status":"publish","type":"post","link":"https:\/\/v7l6z8c7j6p.c.updraftclone.com\/?p=565","title":{"rendered":"Metrofile Holdings \u2013 FY 24 Results \u2013 Disappointing but could be the Bottom"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\"><em>Share Code: MFL \u2013 Market Cap: R1.1bn \u2013 PE: 15.1x \u2013 DY: 5.6%<\/em><\/p>\n\n\n\n<div data-wp-interactive=\"core\/file\" class=\"wp-block-file\"><object data-wp-bind--hidden=\"!state.hasPdfPreview\" hidden class=\"wp-block-file__embed\" data=\"http:\/\/v7l6z8c7j6p.c.updraftclone.com\/wp-content\/uploads\/2024\/10\/Metrofile-Holdings_FY_24_Results-Note-2.pdf\" type=\"application\/pdf\" style=\"width:100%;height:600px\" aria-label=\"Embed of &lt;strong&gt;Metrofile Holdings - FY 24 - Results Note&lt;\/strong&gt;.\"><\/object><a id=\"wp-block-file--media-ac449c74-4007-4746-a5fc-e84f5d4def13\" href=\"http:\/\/v7l6z8c7j6p.c.updraftclone.com\/wp-content\/uploads\/2024\/10\/Metrofile-Holdings_FY_24_Results-Note-2.pdf\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>Metrofile Holdings &#8211; FY 24 &#8211; Results Note<\/strong><\/a><a href=\"http:\/\/v7l6z8c7j6p.c.updraftclone.com\/wp-content\/uploads\/2024\/10\/Metrofile-Holdings_FY_24_Results-Note-2.pdf\" class=\"wp-block-file__button wp-element-button\" download aria-describedby=\"wp-block-file--media-ac449c74-4007-4746-a5fc-e84f5d4def13\">Download<\/a><\/div>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>FY 24 Results: Weaker than expected<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Metrofile\u2019s revenue rose only +1% with MRM South Africa\u2019s revenue slipping -3% hurt the Group as delayed decisions by customers and slower product sales and revenues from digital more than offset good box pricing.<\/li>\n\n\n\n<li>The MRM Middle East\u2019s EBITDA margin fell as management had to fend off two large new entrants in the market, MRM South Africa\u2019s scanning margins saw pressure from internal issues and continued weakness in Kenya saw management impair goodwill by R53.5m in this segment<\/li>\n\n\n\n<li>Management has decided to wind up Tidy Files (successfully executed after year-end), triggering a R19.9m one-off in FY 24.<\/li>\n\n\n\n<li>All these one-offs combined to negatively hit EPS by c.12.6cps with EPS coming in at 3.9cps (FY 23: 32.1cps) but\u2014excluding the one-offs\u2014the Group\u2019s Normalized HEPS declined to 20.0cps (FY 23: 32.1cps).<\/li>\n\n\n\n<li>Despite these troubles, the Group\u2019s cash generation remained strong (R287m of EBITDA generated R309m of cash from operations), degearing continues (Net Debt dropped -9% to R537m) and the Group declared a full-year dividend of 14cps.<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Our Thoughts: New CEO, revised forecasts<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The Group has a new CEO with a solid background, the current CFO steps into MRM South Africa\u2019s turnaround as MD of this major segment, &amp; the Board will announce a new CFO shortly.<\/li>\n\n\n\n<li>We have been relatively ruthless by lowering some long-term assumptions and downgrading FY 25E HEPS by c.-17% (but still see it recovering from FY 24\u2019s trough earnings).<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Forecast, Valuation &amp; Implied Return: Lower discount rate<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>We see Metrofile\u2019s fair value as 347cps (previously: 390cps), implying an EV\/EBITDA of 7.0x &amp; a PE of 21.1x; this compares attractive to Iron Mountain&#8217;s current multiples (see below):<\/li>\n<\/ul>\n\n\n\n<figure class=\"wp-block-image size-full\"><a href=\"http:\/\/v7l6z8c7j6p.c.updraftclone.com\/wp-content\/uploads\/2024\/10\/2024-10-MFL-v2.jpg\"><img loading=\"lazy\" decoding=\"async\" width=\"749\" height=\"439\" src=\"http:\/\/v7l6z8c7j6p.c.updraftclone.com\/wp-content\/uploads\/2024\/10\/2024-10-MFL-v2.jpg\" alt=\"\" class=\"wp-image-567\" srcset=\"https:\/\/v7l6z8c7j6p.c.updraftclone.com\/wp-content\/uploads\/2024\/10\/2024-10-MFL-v2.jpg 749w, https:\/\/v7l6z8c7j6p.c.updraftclone.com\/wp-content\/uploads\/2024\/10\/2024-10-MFL-v2-300x176.jpg 300w, https:\/\/v7l6z8c7j6p.c.updraftclone.com\/wp-content\/uploads\/2024\/10\/2024-10-MFL-v2-624x366.jpg 624w\" sizes=\"auto, (max-width: 749px) 100vw, 749px\" \/><\/a><\/figure>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The change in our fair value is less of a downgrade than our cut in earnings as the large drop in South Africa\u2019s sovereign bond yields over the period has propped up our segmentally-driven DCF fair values (i.e. future cash flows are now worth somewhat more).<\/li>\n\n\n\n<li>Rolling our fair value forward, we arrive at a total return 12m TP of 403cps (previously: 456cps), implying a high c.61% return (including dividends) from these levels.<\/li>\n<\/ul>\n\n\n\n<div class=\"wp-block-file\"><a id=\"wp-block-file--media-c03056aa-e40f-43d7-84f9-0ec98381efba\" href=\"http:\/\/v7l6z8c7j6p.c.updraftclone.com\/wp-content\/uploads\/2024\/10\/Metrofile-Holdings_FY_24_Results-Note-1.pdf\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>Metrofile Holdings &#8211; FY 24 &#8211; Results Note<\/strong><\/a><a href=\"http:\/\/v7l6z8c7j6p.c.updraftclone.com\/wp-content\/uploads\/2024\/10\/Metrofile-Holdings_FY_24_Results-Note-1.pdf\" class=\"wp-block-file__button wp-element-button\" download aria-describedby=\"wp-block-file--media-c03056aa-e40f-43d7-84f9-0ec98381efba\">Download<\/a><\/div>\n","protected":false},"excerpt":{"rendered":"<p>Share Code: MFL \u2013 Market Cap: R1.1bn \u2013 PE: 15.1x \u2013 DY: 5.6% FY 24 Results: Weaker than expected Our Thoughts: New CEO, revised forecasts Forecast, Valuation &amp; Implied Return: Lower discount rate<\/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":[13,133,147,60,20,30,16],"class_list":["post-565","post","type-post","status-publish","format-standard","hentry","category-metrofile-holdings-mfl","tag-equity-research","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\/565","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=565"}],"version-history":[{"count":5,"href":"https:\/\/v7l6z8c7j6p.c.updraftclone.com\/index.php?rest_route=\/wp\/v2\/posts\/565\/revisions"}],"predecessor-version":[{"id":614,"href":"https:\/\/v7l6z8c7j6p.c.updraftclone.com\/index.php?rest_route=\/wp\/v2\/posts\/565\/revisions\/614"}],"wp:attachment":[{"href":"https:\/\/v7l6z8c7j6p.c.updraftclone.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=565"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/v7l6z8c7j6p.c.updraftclone.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=565"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/v7l6z8c7j6p.c.updraftclone.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=565"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}