Pointer Telocation — Update 30 January 2017

Pointer Telocation — Update 30 January 2017

Pointer Telocation

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Pointer Telocation

Taking a ride with Uber

First step into US market

Tech hardware & equipment

29 January 2017

Price*

$8.25/
NIS31.05

Market cap

$65m/
NIS244m

Priced at 25 January 2017

US$/NIS3.7853

Net debt ($m) at 30 September 2016

2.2

Shares in issue

7.87m

Warrants in issue

0.6m

Free float

59.3%

Code

PNTR

Primary exchange

NASDAQ

Secondary exchange

TASE

Share price performance

Business description

Pointer Telocation (PNTR) is a leading provider of MRM services and products to the automotive and insurance industries. Key services are asset tracking, fleet management and monitoring goods in transit/IoT. Its main markets are Israel, Brazil, Argentina, Mexico and Europe.

Analysts

Anna Bossong

+44 (0)20 3077 5737

Richard Jeans

+44 (0)20 3077 5700

Pointer Telocation (PNTR) has won a five-year contract to provide fleet management and driver behaviour monitoring services for 4,000 New York black cars and car service vehicles working for online transportation network companies (TNC), including Uber and Lyft. The contract, announced on 17 January, represents PNTR’s first foray into the US market, which has been made possible by the group’s recent move into cloud-based SaaS services. Although small in revenue terms, the contract looks to have significant upside potential for the group. It should considerably raise the group’s profile in the US in the growth area of driver monitoring, even more-so as global ADAS leader Mobileye is working with PNTR in the project (providing ADAS services). If successful, we see very good prospects for it to lead to further business from the fast-growing TNC sector across the US and internationally, as well as from other forms of for-hire vehicles in NYC.

Year
end

Revenue ($m)

PBT*
($m)

EPS*
(c)

DPS
(c)

EV/EBITDA
(x)

P/E
(x)

Yield
(%)

12/15

60.6

6.3

62.3

0.0

8.8

13.2

N/A

12/16e

63.7

6.4

61.9

0.0

7.7

13.3

N/A

12/17e

70.8

7.9

73.9

0.0

6.6

11.2

N/A

12/18e

75.7

9.4

87.3

0.0

5.6

9.5

N/A

Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.

By improving driving outcomes, the contract aims to reduce the insurance premiums levied by the American Transit Insurance Company (ATIC) for PNTR’s client, which provides vehicle leasing services to TNC drivers.

The contract has been structured in a very clean SaaS form with no working capital burdens for PNTR. We understand that the ARPU will be significantly below the group average of $18pcm, in keeping with the low-cost SaaS model, but with no necessity to provide on-the-ground services, the contract should have above-average gross margins. We estimate that total revenues from the deal could be around $0.3-0.4m pa, giving a revenue uplift of 0.4-0.6% pa, assuming an ARPU range of $6-9pcm.It is planned that the vehicles will be fitted out in February, so first revenue contributions may be as early as Q117.

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Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

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London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 9258 1161

Level 25, Aurora Place

88 Phillip St, Sydney

NSW 2000, Australia

Tel Aviv +44 (0)20 3734 1007
Medinat Hayehudim 60,

Herzilya Pituach, 46766

Israel

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 9258 1161

Level 25, Aurora Place

88 Phillip St, Sydney

NSW 2000, Australia

Tel Aviv +44 (0)20 3734 1007
Medinat Hayehudim 60,

Herzilya Pituach, 46766

Israel

Regeneus — Update 29 January 2017

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