Pointer Telocation

Tel Aviv Stock Exchange: PNTR

$113.4m market cap

$13.94 last close

Pointer Telocation 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.

Investment summary

Pointer Telocation has announced a new collaboration with Microsoft Israel to create an AI-powered driver monitoring and prediction tool. We see the potential for this to give Pointer an important edge in the driver monitoring space in which it is already competing strongly. Q118 results showed a recovery in product sales from Q4 (up 29% q-o-q), but only 5.6% y-o-y growth arising from low demand for non-LTE enabled devices and Latin American (Latam) currency declines. Nevertheless, the group continued to deliver on local currency service revenues, margin gains and cash flow generation but, with Latam currencies continuing to weaken in Q2, despite expected boosts to sales later in the year, we have trimmed our current year EBITDA and EPS forecasts by 10% and 22%, respectively giving rise to a peer-based valuation of $19.1/NIS68.3, and DCF value of $18.1/share or NIS64.6/share.

Y/E Dec
Revenue (US$m)
PBT (US$m)
EPS (fd) (c)
P/E (x)
P/CF (x)
2016A 64.4 9.8 6.6 81.1 17.2 8.4
2017A 78.2 13.9 10.4 116.0 12.0 11.0
2018E 83.6 14.4 10.4 113.3 12.3 10.6
2019E 94.0 16.6 12.4 133.4 10.4 9.0
Share price graph
Balance sheet
Forecast net cash (US$m) 4.3
Forecast gearing ratio (%) N/A
Price performance
Actual 19.1 12.9 (24.6)
Relative* 19.9 20.9 (18.7)
52-week high/low US$18.9/US$10.8
*% relative to local index
Key management
David Mahlab CEO
Zvi Fried CFO

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