Original-Research: MBH Corporation plc - von GBC AG
Einstufung von GBC AG zu MBH Corporation plc
Unternehmen: MBH Corporation plc
Anlass der Studie: Research Report (Initial Coverage)
Kursziel: 1.95 EUR (1.66 GBP)
Kursziel auf Sicht von: 31.12.2020
Analyst: Dario Maugeri, Cosmin Filker
Investment Vehicle that is implementing a buy and hold strategy under
the Agglomeration Methodology
MBH plc is an investment vehicle that connects smart investors to small
profitable international businesses. Currently, MBH's portfolio includes
ten subsidiaries in four segments with local businesses across the UK, New
Zealand, Papua New Guinea, the Pacific Islands and South-East Asia.
Acquisitions are executed in an accretive manner. After an intense
selection process (i.e. high earnings per share), auditing and due
diligence practices, the target companies are wholly acquired (100%) by
issuance of new MBH shares. Their integration is accomplished efficiently
and effectively by trying to create synergies and ultimately increasing the
total value of the combined entities (i.e. increasing pro-forma group
Attractive organic growth opportunities and a pipeline of intensive M&A
transactions are key drivers for shareholders' value creation along with
diversification effects and lower risk. The company promotes organic growth
via an earn-out system that provides incentives to middle managers (former
business owners) to generate additional earnings over a specific base (i.e.
on an acquisition value).
Business owners that approach MBH are typically running mature businesses,
looking for new steps or for scaling opportunities for their business. They
continue to run the subsidiaries and have the opportunity to compete in
larger projects as part of a PLC. It is a way to extract wealth by breaking
through their barriers and constraints (i.e. cash or key people) and
bringing the subsidiaries to the next level. MBH also views itself as a
networking site that provides experience, and information as well as
overseeing internal issues among the different subsidiaries. This also has
the potential to roll out SMEs in different markets or locations.
The success of the agglomeration model can be seen in MBH's first half
numbers. Total revenues reached GBP 21.25m (FY2018: sales GBP 15.5m) as
generated by the acquisitions performed in 2018 (GBP 15.9m) and to the new
subsidiaries included in 2019 (GBP 6.05m). EBT was GBP 1.36m and net profit
for the period GBP 1.10m.
The net assets amounted to GBP 30.01m in H1/19. The main items on the
balance sheet were (1) goodwill of GBP 65.44m, stemming from the recent
acquisitions; (2) receivables of GBP 26.60m; (3) contingent considerations
for earn-out to senior managers and directors of GBP 38.35m in current
liabilities and GBP 9.50m in non-current liabilities. Total cash amounted
to GBP 4.63m.
Besides a projected amount of ten M&A transactions per year for the next
three years, we have assumed in our forecasts substantial organic growth
for MBH's SME portfolio. Our revenue estimates were for GBP 52.59m for 2019
and GBP 136.59m in 2020. We give a BUY recommendation based on a calculated
fair value per MBH share of 1.66 GBP (1.95 EUR). The fair value assumes ten
acquisitions per year. At the end of the current financial year 2020, we
assume that the outstanding shares will increase to a total of 86.31
million. This assumption takes into account the so-called EPS-accretive
acquisitions strategy, according to which the dilution effect when issuing
shares for new acquisitions is less than the new EPS contribution.
Die vollständige Analyse können Sie hier downloaden:
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Date (time) of completion of English version: 28/02/2020 (3:44 am)
Date (time) of first distribution of English version: 02/03/2020 (11:00 am)
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