A look At Photo-Me International Plc (PHTM)

  • Oct 28, 2019 GMT
  • Team Kalkine
A look At Photo-Me International Plc (PHTM)

London Stock Exchange-traded Photo-Me International Plc (PHTM) is a global leader in automated instant-service, equipped with approximately 47,000 unaltered vending units across 18 countries. It operates coin-operated automatic photo booths for identification and fun purpose. As on December 05, 1962, shares of the group were admitted to the main market of the London Stock Exchange for trading. Schroder Investment Management Ltd., FIL Investment Advisors (UK) Ltd. and Miton Asset Management Ltd. are the major institutional shareholders in the company. (Source: Thomson Reuters).

In the exchange filing with the London Stock Exchange as on October 28, 2019, the group reported its trading update for the period May 01 to September 30, 2019. During the period under review company’s operational and strategic progress was in line with the management strategy. The strategy was to diversify the company’s services and products and services. This was primarily led by the acquisition of SEMPA Sarl and expansion of the group’s laundry vertical in April 2019.

During the period under review, group's Identification excluding the UK, revenue increased marginally by 0.2% on a Y-o-Y basis, led by continued decent performance in France and Japan. The group's total reported identification revenue plummeted 3.8%, reflecting narrowing activity in the UK photo booth market. Government organisations have been connected with 12,000 photobooths. This is for uploading securely the photo IDs in Continental Europe and the UK. It is estimated that the numbers will increase as consultation to roll out this technology progresses with the government.

The group's Laundry operations expansion stood as a key driver for the group's growth, as revenue during the period under review surged by 23%, led by the rollout of revolution machines in the key geographies like UK, Ireland, Portugal and Spain at an average rate of 50 machines per month.

As per the previous estimates, the group’s laundry vertical recorded improved contribution to the group’s total revenue on a year-on-year basis.

The group’s Kiosks performance was broadly in line with the expectations, with majority operations in France. However, the group’s capital expenditure in the Kiosks segment has been limited to premium sites as the company’s focus shifted to delivering growth in the Laundry segment.

Post group's entry into the fresh fruit and vegetable juice market through the acquisition of Sempa, the group estimates that this vertical would play a significant part in future growth strategy of the group, alongside laundry and Identification.

In the B2C market, the company distributes self-services juice machines to hotels, restaurants, offices, small businesses and supermarkets, etc. During the period under consideration, the group acquired 150 juice vending machines from L'Orangerie de Paris.  Fabrication of machines for pineapple juice and apple juice is ongoing and these are expected to be operational in FY21.

Key Fundamentals

In the past eight quarters ended April 2019, the group's net sales have grown with a compounded average growth rate of 2%, gross profit narrowed with a CAGR of 1%, operating income plummeted with a CAGR of 5%, Net Income declined with a CAGR of 6% and Basic Earnings Per Share Including Extraordinary items fell off with a CAGR of 6% during the same time period.

During the financial year ended April 30, 2019, the group’s reported revenue narrowed by 0.7% to £228.1m from £229.8m, with EBITDA (excluding associates) slumping 1.8% to £69.7m from £71.0m recorded in the year-over period. Underlying profit before tax declined to £44.1m from £46.8m reported in the FY18 and reduced by 5.8% on a Y-o-Y basis. Reported profit after tax plunged 15.1% to £42.6m from £50.2m recorded in the corresponding period of the previous financial year.

However, during the FY19, the group witnessed many macro headwinds and uncertainties in the UK, which led slowdown in the UK’s consumer activity and delays B2B orders, which impacted the group’s financial with £9.7m negative revenue impact.

Within the group’s operating geographies excluding the UK, the group performed well and in line with the management expectations and overall profit before tax was marginally ahead of their revised estimates.

Stock Information

Shares of the Photo-Me International Plc traded at the main market of the London Stock Exchange with an outstanding market capitalisation of £337.56m, which ranks it among the small cap stocks listed and traded at the LSE. In the year-over period, its shares have delivered a price return of negative 15.75%, trading flat on a YTD basis and plummeted around than 9% in the past one month. However, the group's dividend yield stood considerably higher at 9.45%, despite the fact that the stock was trading flat on a YTD basis.

While writing, shares of the group were quoting at GBX 84.40 and declined approximately 5.49% against the previous closing level. In the year-ago period, shares of the company have registered a 52-week high of GBX 120 and a low of GBX 75, respectively and at the current trading level, its shares were trading 29.6% lower against the 52-week high price level and 12.52% above the 52-week low price level.

Technical Indicators

At the current trading level, shares of the Photo-Me International Plc were quoting well below its short-term and crucial long-term level of 30-day, 50-day and 200-day simple moving average prices. Also, the 9-day and 14-day Relative Strength Index was hovering near oversold territory. GBX 91.78 and GXB 93.71 are immediate strong resistance levels for the stock.

The Moving Average Convergence Divergence oscillator is hovering well below its 9-day Exponential Moving Average, and MACD is falling as well, with 12-day Exponential Moving Average quoting below the 26-day Exponential Moving Average.

However, the stock was quoting substantially below the lower Bollinger Band®, a technical indicator, which generally indicates that a pull-back could take place in the stock price.

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