Pointer Telocation Ltd (NASDAQ:PNTR) has, to a significant extent, transformed itself into a proprietary technology company over the last 18 months, resulting in major contract wins in driver behaviour systems (DBS), connected car (CC) and sensor-based IoT monitoring systems. The group’s ability to cross-sell new services to its extensive customer base as well as enter new markets and geographies, combined with high operating leverage, gives it above-average earnings growth potential. We now value PNTR at parity with the telematics sector, giving rise to a 6% increase in valuation to $20.8 (NIS71.8) per share.
That rare thing: Growth and balance sheet strength
PNTR’s recent tech launches and more aggressive marketing strategy bore fruit in 2017 with a number of major contract wins, and 21% and 42% growth in revenue and EBITDA, respectively. Supported by acquisitions, management aims to double revenues and increase EBITDA margins by 7pp to 25% over the next 3-5 years. We believe this is highly achievable helped by growth from DBS, CC and IoT products, as well as ongoing growth in subscriber numbers. Margins expansion should be driven by the group’s high operating leverage. With only $2.7m net debt, the group is well positioned to continue its strong track record in value-accretive acquisitions.
To read the entire report Please click on the pdf File Below: