Stockopedia view12 Dec 2019 13:31
Paul Scott's view on Stockopedia:
Photo-Me International (LON:PHTM)
Share price: 90p (up 4% today, at 16:19)
No. shares: 378.0m
Market cap: £340.2m
Interim results
Photo-Me International plc (PHTM.L), the instant-service equipment group, announces its results for the six months ended 31 October 2019.
We're presented with a long table of options in terms of profit.
Note how IFRS 16 has complicated matters, by distorting EBITDA. So both measures are given, before and after its impact. Although IFRS 16 has had little impact on profit. I'm happy to focus on the adjusted EPS of 6.0p, up a useful 9.1% on H1 LY. Adjustments are so minor, they're not worth detailing here.
H1 is the seasonally stronger half, so we cannot just double that to arrive at a full year figure, because that would be overly optimistic.
Dividends are what this stock is all about. The 3.7p interim payout is held. The full year yield is 9.8% - remarkable!
Outlook - note the focus on its launderette machines, which seems to be growing well;
The Group remains focused on its strategy to further diversify its product offering both organically through innovation, and through smaller bolt-on acquisitions.
Expansion of Laundry, particularly in new markets such as Germany, Austria and Switzerland, remains a key priority, including increasing the Group's presence in the B2B and the laundrette markets, which continue to represent a material opportunity for the Group. Looking ahead, this business area will continue to account for an increasing proportion of the Group's total revenue in the medium term.
KIS Food is an important component of the Group's future growth strategy and we will continue to progress with the development and rollout of the offer in this business area. Our initial focus will remain within French supermarkets, whilst the Group looks to expand into other Pan-European geographies in the future.
Whilst consumer uncertainty continues to weigh on our business in the UK, we remain confident that the Group will continue to perform well during the coming period, and in line with market expectations, in the current financial year.
Valuation - the forecast for this year FY 04/2020 is 9.77p adj EPS - for a PER of 9.2 - great value for such a cash generative business.
Balance sheet - looks fine to me. As noted last year at this time, it perplexes me as to why PHTM has a large cash balance of £84.8m, and bank debt of £60.2m. This seems inefficient, in terms of interest cost.
Maybe there are seasonal peaks & troughs which see the cash figure drop a lot lower than on the balance sheet dates?
5defcc58c177dPHTM_net_cash.PNG
My opinion - these are good figures, and full year performance is confirmed to be in line.
Why is this share so cheap? In a low interest rate environment, a PER of below 10 seems a bargain. The problem, I imagine, is that the market sees risk that the traditional photo-booths might become obsolete. E.g. in th
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