By Jenny Ruth
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Friday 15th April 2011 |
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Mainfreight has set out to methodically build a global freight logistics business and its 120 million euro (NZ$222 million) acquisition of Wim Bosman has given it a solid footprint into Europe, says Rob Mercer, an analyst at Forsyth Barr.
The purchase price includes a 10 million euro earnout and received unanimous approval from shareholders at a meeting last month.
"Mainfreight has all the right attributes we are looking for in a company," Mercer says. "It has a high marginal return on equity through leveraging organic growth from its existing network," he says.
It has positive earnings momentum and there is further upside, particularly in the year ending March 2012.
"The executive team is proactive and has proven to be highly responsive to changes in market conditions," Mercer says.
He has raised his net profit forecast for the year ending March 2012 by $10.5 million to $73.5 million to reflect the Bosman acquisition which he says adds 11 cents to per-share earnings with the purchase fully debt-funded.
He has also raised his valuation of the stock by 20 cents to $9.36.
Mercer had previously said Mainfreight was targeting Europe and South America for expansion by acquisition, a view confirmed by the Bosman purchase.
Recommendation: Accumulate.
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