Xpediator PLC

http://xpediator.com/ TICKER: XPD     EXCHANGE: AIM

Xpediator Plc is an integrated freight management business operating in the supply chain logistics and fulfilment sector across the UK and Europe with a particular focus on, and expertise in, CEE countries.

LATEST REPORTS

 
Acquisition and placing
Published: Jul 11 2018

Xpediator (XPD) is an integrated freight management business. The Group has three main business areas: freight forwarding services, logistics and warehousing and transport services. Revenues are derived from the UK (23.5% of Group revenue), CEE and Baltic states (76.5%).
It has acquired Import Services Limited (ISL), part-funded via a placing of 10m new ordinary shares. The acquisition represents the Group’s fourth since IPO and significantly expands the Group’s capabilities at the Port of Southampton, adding a contract logistics business and in excess of 40,000 sqm of warehousing. We anticipate many operational synergies, expansion opportunities and cross-selling potential to emerge from the deal.  
We anticipate benefits to ultimately arise from combining the Group’s four facilities in Southampton, with cross-selling of freight forwarding services into ISL and the new subsidiary taking on contract warehousing work from Regional Express. In addition, there is the opportunity to develop further warehousing space (20k sqm) in the port, thereby consolidating the Group’s presence in the area. The Group now has a major presence in the two UK ports servicing non-EU trade, which should augur well post-Brexit.  
XPD has raised £7m before expenses, via a placing of 10m shares at 70p. The consideration amounts to £12m, on a cash and debt-free basis, of which £9m is payable on completion. This cost is to be funded by a cash payment of £6m and £3m in shares, with the outstanding £3m dependent upon the future results of ISL, coupled with the share price of XPD in late May 2020. The £9m initial consideration equates to a historic, fully taxed earnings multiple of 6.0x, which we regard as good value in view of the strategic importance of the deal to the Group.
We have updated our financial expectations following the acquisition of ISL and related placing. In terms of earnings per share, we have increased our expectations for FY2018F by 9.5% and by 11.5% in FY2019F. We anticipate that net cash at the FY2018F year end is now likely to amount to £3.1m, rising to £7.3m in FY2019F. 
Dividend forecasts increase, too, and our updated discount model now suggests that 97p per share is a fair value at the current time, but investors will clearly hope for further accretive acquisitions to bolster earnings’ momentum. The shares stand on undemanding multiples (two-year PEG ratio of 0.65x) relative to prospects.
 
'Walking the talk' - another good deal
Published: Jun 07 2018

Xpediator (XPD) is an integrated freight management business. The Group has three main business areas: freight forwarding services, logistics and warehousing and transport services. Revenues are derived from the UK (23.5% of Group revenue), CEE and Baltic states (76.5%).
XPD has announced that it has acquired Anglia Forwarding Group (‘Anglia’), its third purchase since IPO last year. We anticipate strong scope for integration benefits, some of which are likely to emerge in the very short-term, not least the move of the Group’s export freight consolidation base into Anglia’s main warehouse facility. 
In addition, there is significant scope for cross-selling between the businesses, particularly in the US, utilising the acquired business’ presence in air and sea freight, and in the Midlands. Anglia also has strong European road freight links, notably in Germany, which can be developed further. 
Anglia is a founding member of United Shipping, which is a worldwide network of independently owned and locally operated freight forwarders and customs brokers, focused predominantly on air and sea freight. This relationship potentially opens an extensive customer base globally, which we expect to be linked with Regional Express’ association with Amazon, where the Group has over 1,000 customers in the USA.
We see a positive impact of the acquisition on our forecasts and, after taking into account the recent FY2017 results and trading comments, raise our EPS estimates by 2.8% in FY2018F and by 2.3% in FY2019F. Using our previous valuation methodologies, a share price of 74.5p appears merited.  
 
Investor Forum, March 2018
Published: Apr 03 2018

Stephen Blyth, CEO, outlines the Group's structure, examines recent financial statements and discusses the Group's future growth strategy.
 
Accelerating growth ?
Published: Mar 15 2018

Xpediator (XPD) is an integrated freight management business. The Group has three main business areas: freight forwarding services, logistics and warehousing and transport services. Revenues are derived from the UK (23.5% of Group revenue), CEE and Baltic states (76.5%).
As demonstrated by the recent trading update, XPD continues to grow rapidly by acquisition and also organically (+46% year-on-year in 2017). We anticipate further strong growth during the course of our estimates, too.
Well-established position with the CEE region and the Baltic states and therefore a competitive advantage over late entrants to the region. The CEE region and Baltic states are growing much faster in GDP terms than either the UK or the remainder of the EU. This positioning, should help the Group benefit from continued re-shoring of manufacturing from the Far East. 
Eshopwedrop and Pall-Ex Romania are still in their relative infancies, growth-wise, in our opinion. We anticipate Eshopwedrop, which is now profitable, will grow strongly in both existing markets and by new / forthcoming franchise agreements in Georgia, Albania, Greece, Bulgaria, Ukraine and the USA. The strong growth of Eshopwedrop is expected to result in a cross-selling of warehousing and distribution services.
In addition, Xpediator is looking to open new office locations within the freight forwarding division in the UK. Within the transport & logistics division, management is seeking to open strategically located warehouse facilities (UK Midlands), driven by e-commerce and introduce new services in both existing and new markets. 
As management own 68% of the company, their interests are fully aligned with external shareholders and they are fully focused on value creation. On a forecast 2019 PER of 10.8x and yield of 4.1% the shares appear lowly rated despite the many growth opportunities. This is reinforced by our own valuation calculation using three different methodologies: peer group comparisons, discounted cash flow, and dividend discount model. This suggests a share value of 74p is merited, still well above current levels despite recent gains.
NB you can meet CEO and Founder Stephen Blyth at the ED Investor Forum on March 28th, please register here: 
https://www.eventbrite.co.uk/e/equity-development-investor-forum-march-2018-tickets-43192146874?ref=elink

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