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

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: GBC Management Interview
Empfehlung: Management Interview
Kursziel: -
Letzte Ratingänderung: 
Analyst: Dario Maugeri, Cosmin Filker

MBH Corporation plc is an investment holding company based on an innovative
Agglomeration Model that allows SMEs to convert their private shares into
MBH shares. Private owners may thus take advantage of a public limited
corporation (plc) structure. Currently, the group is divided into three
segments: education, construction and engineering across the UK, New
Zealand and Singapore.
GBC-analyst Dario Maugeri spoke with Callum Laing, CEO of MBH:
 
Dario Maugeri: Mr. Laing, MBH's Agglomeration Model is an innovative 'buy
and hold' approach which is building up a diversified portfolio of
profitable companies. Which would you define as key strengths of this
approach?
 
Callum Laing:  There are several strengths to this model. Diversification
is for us about protecting our shareholders first and foremost and not
leaving us too exposed to inevitable cycles in different industries.
Geographic diversification also gives us some protection against different
macro-economic or currency exposures. Beyond defensive, it also provides us
with a much bigger pool of companies to choose from and this allows us to
announce material acquisitions on a regular basis leading to greater scale
and liquidity in the company.
 
We end up with the ultimate in fast growth, decentralized management who
has earned the authority and autonomy to respond to opportunities on the
front line in real time without having to be weighed down by too much
bureaucracy. The three key drivers of value in the Agglomeration Model are:
Acquisitions are all EPS accretive, Organic growth and Synergistic growth
through collaboration.
 
Dario Maugeri: Can you briefly describe to us your accretive growth
principle?
 
Callum Laing: A small business will typically trade at a lower multiple
than a big PLC. Our model exploits the arbitrage of this effect for the
benefit of all shareholders. Acquisitions are completed on earnings per
share (EPS) accretive manner. It's effectively issuing shares at lower
price-to-earnings (PE) multiples than MBH's PE ratio.
 
Dario Maugeri: Under the brands Acacia Training and Parenta you built up
the education segment. How is the segment currently performing and what are
the key market drivers?
 
Callum Laing: Education is a very interesting industry for us with many
opportunities to work with great companies around the world. It is highly
fragmented with some great entrepreneurs and that is exciting for us.
 
Acacia is just one great example of a company successfully leveraging the
benefits of joining MBH to thrive. We are seeing good organic growth within
the business. Plus, they have been adding opportunistic tactical
acquisitions to further bolster and enhance the service offerings of the
group which should result in higher EBIT growth. This leads to more
synergies and great opportunities.
 
Dario Maugeri: Beside the construction and education segments, you recently
acquired a company engaged in the engineering services segment: the Asia
Pacific Energy Ventures Pte Ltd (APEV). They should become the most
significant revenue contributors for the whole MBH group. Which development
do you expect for APEV?
 
Callum Laing: APEV is a fantastic company and I believe that with the
benefits of a PLC it will be able to bid for and win even more impressive
projects. However, whilst APEV is significant today, we are confident of
adding many more companies of the size and quality of APEV over the coming
years to complement the group. We also have companies in the group that are
growing fast. The beauty of the Agglomeration Model is that, as we grow,
our material dependence on any one business lessens, which makes the model
even stronger for investors.
 
Dario Maugeri: Mr. Laing with around nine companies in portfolio you are
also encouraging synergies between companies or segments. Could you offer
us an example of synergies developed or underway?
 
Callum Laing: Education is a good example - the companies are now sharing
resources which include sales and finance.
 
Construction - the companies are now providing various services for
projects which reduce the requirement to engage sub-contractors.
 
Beyond those synergies we are also seeing a very strong culture emerging of
sharing best practices amongst companies even across different industries.
For many of the business owners joining this could be the first time in 20
years they have had a support network. Despite the differences there are
many more things that successful small businesses have in common than
separates them.
 
Dario Maugeri: Since the listing of MBH the number of acquisitions has
grown consistently year on year. In the guidance you mentioned the target
of 15-20 acquisitions per year. Which segment do you intend to strengthen
the most?
 
Callum Laing: We have only just completed our first year of listing but,
yes, we are very bullish on growing the group over the coming years. The
advantage of MBH is that there is no need or requirement to strengthen
various sectors. The sectors will naturally grow due to the entrepreneurial
nature of the principals in the company. We are sector-agnostic. So, over
the coming years, you will see us bring on companies in many other
verticals and every time we do so it will also attract others like them to
join us.
 
Longer-term industries can peak and trough but we will continue to add
great companies in an accretive manner enhancing the value for all
shareholders. We don't see any shortage of great businesses that can thrive
in an environment like ours.
 
Dario Maugeri: Mr. Laing, MBH revenues have risen consistently due to
organic growth and portfolio expansion in the last year. For a better
understanding of the true value of MBH shares, which key elements would you
point out to investors?
 
Callum Laing: The recent announcement on pro forma revenue and EBITDA
growth should help to explain things more clearly for investors. I
mentioned in the Chairman's Letter when we first listed that we don't need
organic growth for this model to create massive shareholder value. However,
if we weren't seeing organic growth, then we would probably need to ask
ourselves some hard questions. Fortunately, and I acknowledge it is still
very early days, the companies in the group are thriving.
 
For us, the metric we focus most on is EPS. It is easy to get carried away
with doing acquisitions but being bound to focus on increasing EPS with the
majority of acquisitions is a very good discipline and it allows us the
freedom to have the growth pace of a tech company but by not using cash for
acquisitions we can pay dividends in the future as a more mature company
might.
 
Dario Maugeri: Where do you see MBH in the next five years?
 
Callum Laing: At our current trajectory we should comfortably have a market
cap in the multibillion range. Whilst that's exciting it's not what we
focus on internally. We will continue to focus on the drivers of value that
we can control; Accretive acquisitions, Organic Growth and Group Synergies.
We are lucky that we attract fantastic small business owners to us and
increasingly we are attracting good, long-term investors that also
appreciate the bigger picture of what we are trying to do. We will continue
to focus on the fundamentals and getting our EPS up.
 
Dario Maugeri: Mr. Laing, thank you for the interview.

Die vollständige Analyse können Sie hier downloaden:
http://www.more-ir.de/d/19763.pdf

Kontakt für Rückfragen
Jörg Grunwald
Vorstand
GBC AG
Halderstraße 27
86150 Augsburg
0821 / 241133 0
research@gbc-ag.de
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Offenlegung möglicher Interessenskonflikte nach § 85 WpHG und Art. 20 MAR. Beim oben analysierten Unternehmen ist folgender möglicher Interessenkonflikt gegeben: (5a,5b,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: 13/12/2019 (09:29 am)
Date (time) of first distribution of English version: 13/12/2019 (10:00 am)

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


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