{"id":636,"date":"2025-03-12T01:01:00","date_gmt":"2025-03-12T01:01:00","guid":{"rendered":"https:\/\/bluegemresearch.co.za\/?p=636"},"modified":"2025-03-11T12:25:07","modified_gmt":"2025-03-11T12:25:07","slug":"metrofile-holdings-ltd-h125-results-south-africas-bottomline-turns","status":"publish","type":"post","link":"https:\/\/v7l6z8c7j6p.c.updraftclone.com\/?p=636","title":{"rendered":"Metrofile Holdings Ltd &#8211; H1:25 Results &#8211; South Africa\u2019s Bottomline Turns"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\"><em>Share Code: MFL \u2013 Market Cap: R0.7bn \u2013 PE: 14x \u2013 DY: 8%<\/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\/2025\/03\/Metrofile-Holdings_H1_25_Results-Note.pdf\" type=\"application\/pdf\" style=\"width:100%;height:600px\" aria-label=\"Embed of &lt;strong&gt;Metrofile Holdings - H1:25 - Results Note&lt;\/strong&gt;.\"><\/object><a id=\"wp-block-file--media-5adfccbb-fa0a-4f82-b41b-63448014296c\" href=\"http:\/\/v7l6z8c7j6p.c.updraftclone.com\/wp-content\/uploads\/2025\/03\/Metrofile-Holdings_H1_25_Results-Note.pdf\"><strong>Metrofile Holdings &#8211; H1:25 &#8211; Results Note<\/strong><\/a><a href=\"http:\/\/v7l6z8c7j6p.c.updraftclone.com\/wp-content\/uploads\/2025\/03\/Metrofile-Holdings_H1_25_Results-Note.pdf\" class=\"wp-block-file__button wp-element-button\" download aria-describedby=\"wp-block-file--media-5adfccbb-fa0a-4f82-b41b-63448014296c\">Download<\/a><\/div>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>H1:25 Results: The Good Offset by the Bad<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Metrofile reported a disappointing H1:25 as improvements in MRM South Africa were offset by struggles in other non-digital areas. Group continuing revenue increased by 4%, driven by secure storage and cloud services, but this was impacted by declines in content services and image processing.<\/li>\n\n\n\n<li>While MRM South Africa improved operating profit by 19%, MRM Rest of Africa &amp; MRM Middle East faced challenges, and Normalised HEPS decreased by 18% to 10.7cps (H1:24 \u2013 13cps).<\/li>\n\n\n\n<li>Newly classified segment, \u201cCloud &amp; Content Services\u201d, saw revenue increased by 9% to R74m, but operating profit decreased by 10% to R10m. Metrofile Cloud (previously, IronTree) demonstrated consistent growth but (project-driven) Metrofile VYSION had a slower period.<\/li>\n\n\n\n<li>Management focus remains on building a digital offering, generating free cash flow, and reducing the Group\u2019s debt.<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Our Thoughts: \u201cCloud &amp; Content Services\u201d Segment Revealed<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The exit of Tidy Files and separating of the Group\u2019s digital businesses into the \u201cCloud &amp; Content Services\u201d segment allow us to value this segment separately.<\/li>\n\n\n\n<li>Due to this, we have added a Sum-of-the-Parts (SOTP) model focussing on EV\/EBITDA relative multiples drawn from listed digital document\/file storage companies.<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Forecast, Valuation &amp; Implied Return: 250~300cps fair value range<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>While we have maintained our DCF approach as a sense-check, we have changed our valuation methodology to an EV\/EBITDA driven Sum-of-the-Parts (SOTP) given the different profile that the newly disclosed \u201cCloud &amp; Content Services\u201d segment has from the rest of the Group and, thus, the different multiple it could arguably demand in the market.<\/li>\n\n\n\n<li>Based off this, we see Metrofile\u2019s fair value as 297cps (previously: 347cps), implying an EV\/EBITDA of 6.4x &amp; a PE of 16.7x. Rolling our fair value forward, we arrive at a total return 12m TP of 347cps (previously: 403cps).<\/li>\n<\/ul>\n\n\n\n<figure class=\"wp-block-image size-large\"><a href=\"http:\/\/v7l6z8c7j6p.c.updraftclone.com\/wp-content\/uploads\/2025\/03\/2025-03-11-MFL-SOTPs.png\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"349\" src=\"http:\/\/v7l6z8c7j6p.c.updraftclone.com\/wp-content\/uploads\/2025\/03\/2025-03-11-MFL-SOTPs-1024x349.png\" alt=\"\" class=\"wp-image-641\" srcset=\"https:\/\/v7l6z8c7j6p.c.updraftclone.com\/wp-content\/uploads\/2025\/03\/2025-03-11-MFL-SOTPs-1024x349.png 1024w, https:\/\/v7l6z8c7j6p.c.updraftclone.com\/wp-content\/uploads\/2025\/03\/2025-03-11-MFL-SOTPs-300x102.png 300w, https:\/\/v7l6z8c7j6p.c.updraftclone.com\/wp-content\/uploads\/2025\/03\/2025-03-11-MFL-SOTPs-768x262.png 768w, https:\/\/v7l6z8c7j6p.c.updraftclone.com\/wp-content\/uploads\/2025\/03\/2025-03-11-MFL-SOTPs-1536x523.png 1536w, https:\/\/v7l6z8c7j6p.c.updraftclone.com\/wp-content\/uploads\/2025\/03\/2025-03-11-MFL-SOTPs-624x213.png 624w, https:\/\/v7l6z8c7j6p.c.updraftclone.com\/wp-content\/uploads\/2025\/03\/2025-03-11-MFL-SOTPs.png 1594w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/a><\/figure>\n\n\n\n<ul class=\"wp-block-list\">\n<li>This agrees with our DCF Model\u2019s views and, broadly, we think that the Group\u2019s fair value range is from c.250cps to c.300cps.<\/li>\n<\/ul>\n\n\n\n<div class=\"wp-block-file\"><a id=\"wp-block-file--media-5adfccbb-fa0a-4f82-b41b-63448014296c\" href=\"http:\/\/v7l6z8c7j6p.c.updraftclone.com\/wp-content\/uploads\/2025\/03\/Metrofile-Holdings_H1_25_Results-Note.pdf\"><strong>Metrofile Holdings &#8211; H1:25 &#8211; Results Note<\/strong><\/a><a href=\"http:\/\/v7l6z8c7j6p.c.updraftclone.com\/wp-content\/uploads\/2025\/03\/Metrofile-Holdings_H1_25_Results-Note.pdf\" class=\"wp-block-file__button wp-element-button\" download aria-describedby=\"wp-block-file--media-5adfccbb-fa0a-4f82-b41b-63448014296c\">Download<\/a><\/div>\n","protected":false},"excerpt":{"rendered":"<p>Share Code: MFL \u2013 Market Cap: R0.7bn \u2013 PE: 14x \u2013 DY: 8% H1:25 Results: The Good Offset by the Bad Our Thoughts: \u201cCloud &amp; Content Services\u201d Segment Revealed Forecast, Valuation &amp; Implied Return: 250~300cps fair value range<\/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":[13,174,15,133,173,147,60,20,30,16],"class_list":["post-636","post","type-post","status-publish","format-standard","hentry","category-metrofile-holdings-mfl","tag-equity-research","tag-irontree","tag-jse","tag-metrofile","tag-metrofile-cloud","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\/636","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=636"}],"version-history":[{"count":1,"href":"https:\/\/v7l6z8c7j6p.c.updraftclone.com\/index.php?rest_route=\/wp\/v2\/posts\/636\/revisions"}],"predecessor-version":[{"id":642,"href":"https:\/\/v7l6z8c7j6p.c.updraftclone.com\/index.php?rest_route=\/wp\/v2\/posts\/636\/revisions\/642"}],"wp:attachment":[{"href":"https:\/\/v7l6z8c7j6p.c.updraftclone.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=636"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/v7l6z8c7j6p.c.updraftclone.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=636"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/v7l6z8c7j6p.c.updraftclone.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=636"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}