ORIGINAL RESEARCH

13:31 | 29.06.2020
MBH Corporation plc

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: Research Report (Anno)
Empfehlung: Buy
Kursziel: 1.89 EUR
Kursziel auf Sicht von: 31.12.2020
Letzte Ratingänderung: –
Analyst: Dario Maugeri, Cosmin Filker

Significant growth in the first full year of listing
Management skills proved by organic growth and five acquisitions in 2019
Dividend of EUR 0.005 cents per share

For the financial year ended in 2019 MBH Corporation plc (MBH) reported a
set of outstanding numbers. Revenues grew from GBP 12.5m to GBP 50.8m, up
306%, while EBIT rose from GBP 1.44m to GBP 4.11m, up 186%. These figures
stem from the full-year consolidation of the three founding companies
(Cape, Parenta and Acacia), their growth as well as five additional
acquisitions. These results confirm the success of the MBH agglomeration
model as well as management skills. On this basis, the management decided
for a dividend per share of 0.005 cents for the year 2019.

MBH is an acronym for multi-business holding. In a nutshell, the model
works out by putting together various private small companies in a PLC
ecosystem. After share-for-share exchange acquisition, the subsidiaries are
grouped under non-trading companies (special-purpose vehicles) and are
supported in growth and tactical acquisition. Joining MBH, the units have
gained scale (i.e. larger value contracts) and financing (i.e. access to
loans) benefits. Target businesses are in the range of USD 1-10m EBITDA.

Accretive acquisitions over small entities are generally favourable for the
listed company. It is expected to boost earnings per share of the holding
and to mitigate the dilution effects of a new share issue. Since FY2020 MBH
has begun acquisitions combining the payment with a debt issue (i.e.
private loan or public debt issue). Eventually, this substantially reduces
the dilution effect.

A substantial acquisition pipeline and attractive organic growth are the
key drivers of MBH’s value creation. At the time of writing the portfolio
is well-diversified in four segments with eleven companies. Organic growth
is promoted via an earn-out system on each additional gain over a specific
base (i.e. on previous earnings). This also is a way to extract wealth by
breaking through their barriers and constraints and to roll out SMEs in
different markets or locations.

Group net assets amounted to GBP 43.3m at the end of fiscal year 2019. The
main items on the balance sheet were (1) goodwill of GBP 36.54m, stemming
from the recent acquisitions; (2) receivables of GBP 21.20m; (3) payables
of GBP 14.84m; (4) contingent considerations for earn-out to senior
managers and directors of GBP 6.43m. Total cash on balance was GBP 4.50m.

Since our estimations (Initial Coverage) were published at the beginning of
March 2020, we have adjusted the forecasts in order to consider the
COVID-19 crisis. We have reduced to five the acquisitions for the fiscal
year 2020 (previously ten) and then from 2021, again ten deals a year. It
remains our assumption for EPS-accretive acquisitions strategy, according
to which the dilution effect when issuing shares for new acquisitions is
less than the new EPS contribution. Our moderate scenario is also set in
reduced organic growth for 2020 while a recovery is expected in FY 2021. We
have also considered the deconsolidation of APEV, MBH’s largest investment
to date in our forecasts, and thus we have adapted our previous shares
issue projection from 86.31m to 49.20m. In all, we have reduced the share
capital from 142.85m to 83.65m (mainly for the APEV’s demerger) but
confirming our BUY rating with the new fair value per share of EUR 1.89 or
GBP 1.70 (previous EUR 1.95).

Die vollständige Analyse können Sie hier downloaden:
http://www.more-ir.de/d/21157.pdf

Kontakt für Rückfragen
Jörg Grunwald
Vorstand
GBC AG
Halderstraße 27
86150 Augsburg
0821 / 241133 0
research@gbc-ag.de
++++++++++++++++
Offenlegung möglicher Interessenskonflikte nach § 85 WpHG und Art. 20 MAR Beim oben analysierten Unternehmen ist folgender möglicher Interessenkonflikt gegeben: (5a,11); Einen Katalog mölicher Interessenkonflikte finden Sie unter:
http://www.gbc-ag.de/de/Offenlegung.htm
+++++++++++++++
Date (time) of completion: 26.06.2020 (6:30 pm)
Date (time) of first distribution: 29.06.2020 (1:30 pm)
Target price valid until: max. 31.12.2020

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

Für den Inhalt der Mitteilung bzw. Research ist alleine der Herausgeber bzw.
Ersteller der Studie verantwortlich. Diese Meldung ist keine Anlageberatung
oder Aufforderung zum Abschluss bestimmter Börsengeschäfte.


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