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Monday 02 March, 2020

MBH Corporation plc

Original-Research: MBH Corporation plc (von GBC AG): BUY

Original-Research: MBH Corporation plc - von GBC AG

Einstufung von GBC AG zu MBH Corporation plc

Unternehmen: MBH Corporation plc
ISIN: GB00BF1GH114

Anlass der Studie: Research Report (Initial Coverage) Empfehlung: BUY
Kursziel: 1.95 EUR (1.66 GBP)
Kursziel auf Sicht von: 31.12.2020
Letzte Ratingänderung:
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 figures).

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: http://www.more-ir.de/d/20161.pdf

Kontakt für Rückfragen
Jörg Grunwald
Vorstand
GBC AG
Halderstraße 27
86150 Augsburg
0821 / 241133 0
[email protected]
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Offenlegung möglicher Interessenskonflikte nach § 85 WpHG und Art. 20 MAR. Beim oben analysierten Unternehmen ist folgender möglicher Interessenkonflikt gegeben: (5a,11); Einen Katalog möglicher Interessenkonflikte finden Sie unter: http://www.gbc-ag.de/de/Offenlegung
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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)

-------------------übermittelt durch die EQS Group AG.-------------------

Für den Inhalt der Mitteilung bzw. Research ist alleine der Herausgeber bzw. Ersteller der Studie verantwortlich. Diese Meldung ist keine Anlageberatung oder Aufforderung zum Abschluss bestimmter Börsengeschäfte.


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