Eroad founder, chief executive and major shareholder Steven Newman. Photo / Supplied
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NZX-listed fleeting tracking company Eroad is ready to hit the road, according to Jarden.
The wealth manager maintained its "outperform" rating following Eroad's full-year earnings on Friday, and upgraded its 12-month target price from $3.40 to $4.49.
Broad closed yesterday at $3.25.
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The stock is up 7.97 per cent for the year.
Jarden analysts Wassim Kisirwani and Wilson Wong say Eroad's current valuation is "punitive" and based on historic issues.
"The business is significantly lower risk than it was five years ago, and with its market value [$221m] largely unchanged, we see a compelling investment case" the pair say.
They acknowledge that deals are taking longer in the age of Covid, and the likelihood of slower unit growth in 2021. But liked the 73 per cent increase in ebitda in the year just closed, and increases in profit margin and arpu (average revenue per unit per month) and see further gains ahead.
Eroad saw its revenue jumped by a third to $81.2m for its financial year ended March 31, 2020, despite Covid-19 delaying contracts in the final quarter.
The NZX-listed fleet logistics company made a net profit of $1.0m against its year-ago net loss of $4.9m (although its accounts also note the potential for $1.3m to be reclassified, which could ultimately lead to a $0.3m loss).
Cofounder, chief executive and major shareholder Steven Newman said it would be irresponsible to offer guidance for FY2021 with the situation still so clouded by coronavirus.
But Newman did offer the broad observation that he say unit sales growth slowing for Eroad's truck-tracking hardware but average revenue per unit from monthly subscription software services increasing.
For the year just closed, SaaS average monthly revenue per unit increased to $58.38 per month from $55.08.
Though generally cautious in his comments, Newman said the need for better contact tracing had helped drive a pickup in sales during April and May, particularly in the light vehicle market.
New features, such as road and driver-facing cameras, plus the option to deliver instructions to a driver when they logged on about contactless delivery or similar instructions, were coming by the end of the calendar year.
Newman said the health of the transportation industry in FY2021 was hard to pick, with some areas like online deliveries increasing, but others hit by recession.
He did see stronger uptake of Eroad's cloud-based products, however, and his company benefiting overall from a tighter industry focus on costs, and managing supply chains.
Eroad also said on Friday that it had refinanced and extended a $60m debt facility, which is 40 per cent undrawn. Newman did not see any need for further financing in 2021 unless Eroad made an acquisition - something he saw as a possibility as Covid hit rivals, particularly in North America. He sees "significant industry consolidation" soon.
Dual listed Ebos will be in the spotlight today after its largest shareholder, Sybos Holdings last night initiated a $323 million share sale through Citi and Forsyth Barr.
The shares were being sold at $21.52 each, a 3.7 per cent discount to the last traded price of $22.35 and represented 9.2 per cent of the company.
The block trade follows a similar move last November when it unloaded a 9.3 per cent stake worth $338m at the time.
In April, Ebos - a leading marketer and distributor of recognised consumer products and animal care brands – said its healthcare division had experienced "unprecedented levels of demand" amid the coronavirus crisis.
Earlier in February, when the company reported a near 22 per cent lift in first-half net profit, chief executive John Cullity said the group was confident of a significant increase in earnings in the current financial year. At that point, Ebos hadn't seen any significant impact from the coronavirus crisis.
Sybos is a unit of Hong Kong-based Zuellig Group, which came on as a cornerstone shareholder when it sold the Symbion pharmaceutical business to the listed firm.
Sybos' will retain an 18.9 per cent stake – which can't be sold until Ebos releases its 2020 financial year result in August, due to escrow agreements, the AFR reported.
The Treasury could be poised to unveil a new, long-dated bond when its publishes its bond tender schedule for July on Wednesday.
The 8 am announcement from NZ Debt Management will be followed by the Reserve Bank's official cash rate review at 2 pm.
The Treasury will have taken some confidence from the last week's huge $7 billion bond syndication, which attracted $14b in bids.
Aside from Government debt, there is also a healthy appetite for New Zealand-dollar denominated paper.
Last week, KBN - Norway's equivalent of New Zealand's Local Government Funding Agency - raised $500 million through a Kauri bond issue.
"The capital markets are certainly hotting up right now," ANZ strategist David Croy said.
Croy is picking the Treasury will unveil a 2041 nominal bond due to the timing constraints posed by the September 19 election and the pre-election fiscal and economic update (PREFU), which is due by the end of August.
A bond of that maturity would make it the longest nominal bond, against the current long bond, which matures in 2037.
Expectations are that the new bond will be long-dated, but there is some debate as to what the maturity will be.
The Treasury has already flagged that there will be two bond syndications in the third quarter.
"Given the size of the last deal, they could cancel one of the two syndications flagged for Q3, but I'd suggest the market wants a bond longer than 20 years right now so they may as well take advantage of that demand," Croy said.
Interest in last week's offer was such that NZDM increased the 2019/20 bond programme by $4b to $29b, which is seen as taking some pressure off next year's funding requirement.
The Government's fiscal outlook has taken a huge hit from Covid-19.
Before the outbreak, the Treasury had pencilled in a $10 billion bond tender programme for 2020/21. Now it's $60b.
Dual-listed a2 Milk has replaced one of Australia and New Zealand's oldest institutions, AMP, on the S&P/ASX50 index, as of this week.
In other changes, Australasian retail group Kathmandu has been added to the S&P/ASX300 index.
Air New Zealand has been added to Australia's All Ordinaries Index, along with Ebos Group.
Power generator and retailer Mercury NZ has been added to the All Ords while Sky Network TV has been removed, S&P Dow said.
Last week, shares in Port of Tauranga rallied on the back of index re-weightings.
"We send you Marmite, you send us Vegemite." UK prime minister Boris Johnson this week summed up the benefits of a bilateral free trade agreement with Australia. He trumpeted a bounty of tariff-free swaps of the two nation's spreads, chocolate biscuits — notably Australia's Tim Tams — and financial services.
Leave aside the fact there is barely enough Marmite for British toast right now; closed pubs have imperilled supply of brewers' yeast, a key ingredient. Forget, too, that UK trade with Australia, at £18bn last year, is a fraction of the £670bn trade with the EU that stands to lose existing tariff treatments following Brexit. What businesses benefit?
Gold, lead and wine are among Australia's biggest exports to the UK but the lucky country is still irked that we buy barely any of its red meat. Back in 1955 — before the EU's predecessor redirected trade to within the trading zone — Australia exported 47,000 tonnes of sheep meat to the UK and three times as much beef. That meant virtually all its lamb and mutton exports made the 10,500 mile or so journey to the other side of the world. Sixty years later, the UK was turning elsewhere for its beef but vacuuming up nearly all Australia's chickpeas.
Time has not slaked our thirst for Australian wines, however: the UK imported about £245m worth in 2018. That may be just a third of the French wine imported by the UK, and even below New Zealand tipples, but it beats drink flowing in the other direction. Australia spent £117m on imports of Scotch last year, much the same as the previous year and ranking it the 11th biggest market. That means it has slipped down two notches since 2016 when the industry body sought to eliminate a 5 per cent ad valorem import duty.
And what of those British boomerang exports highlighted by Mr Johnson? Wicked Booma — purveyor of Frisbee-like boomerangs founded by a Scottish-born, Australian-bred entrepreneur — is a business with potential to generate plenty of returns. It is projecting sales of 500,000 to 600,000 units this year to Australia, at a retail cost of A$6m to A$8m (US$4m to US$5m). Nice for Wicked, but for the UK that equates to maybe a couple of hours' worth of the £17.3bn in road vehicles exported to the EU last year. - Lex, Financial Times
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