Pointer Telocation (PNTR) is a telematics company with a focus on Israel and Latin America. In addition to sales of its own telematics devices, the group generates high recurring revenues from mobile resource management services. The results for the first nine months support our top-line and normalised full year profit expectations, representing 74-76% of our forecast FY revenue and EBIT. We have nevertheless cut our current year PBT forecast by 6% to account for higher finance and one-off costs. PNTR’s forward P/E discount to the sector has widened from 34% to 37% in recent weeks and we see potential for a re-rating on stronger earnings growth, which should be driven by the recent acquisition of Cielo Telecom in Brazil, a strong pipeline of new products and rising service margins.

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