New Zealand Professional Investment Services Firm

Forsyth Barr

We are proud to be a New Zealand owned firm, with 21 offices throughout the country and over 300 employees. We assist personal, institutional and corporate clients providing a full range of investment services.

Forsyth Barr is a foundation New Zealand Exchange firm (NZX) and accredited market participant. We have been confirmed by the Financial Markets Authority as a Qualifying Financial Entity (QFE).

Research is the cornerstone of our advice. We have one of New Zealand's leading teams of analysts. Our global affiliations ensure comprehensive research coverage of all major investment markets.

New Zealand Professional Investment Services Firm, Forsyth Barr

Equity Bottom-Up

Plexure&nbsp;Group Patiently Waiting for a&nbsp;McFlurry&nbsp;of Deals

OUTPERFORM
We initiate&nbsp;Plexure&nbsp;(PX1) with an OUTPERFORM rating and target price of NZ$1.58. PX1 is exposed to an ongoing thematic shift which has seen global advertising expenditure recycled into mobile and desktop solutions, away from more traditional print channels such as newspaper and magazine. PX1 provides customers with a mobile marketing platform utilising artificial intelligence (AI) in&nbsp;conjuction&nbsp;with existing mobile applications to create personalised loyalty offers, which are redeemable in store.&nbsp;In combination with its self-help turnaround strategy and growing international recognition, we believe the company is well positioned to win new contracts. Shortage of data engineers is likely to slow PX1's short term product development however we do not expect this to impact PX1's overall growth strategy or ability to secure new clients. PX1 has the option to recruit across different parts of New Zealand or outsource globally to alleviate inflationary wage pressure and employee shortages (corroborated&nbsp;by discussions with&nbsp;recruitment agencies). At current prices PX1 presents a compelling buying opportunity for the long-term investor, although patience will be required given PX1's expected lumpy revenue growth.&nbsp;


McDonald's&nbsp;do appear to be 'lovin&nbsp;it'&nbsp;


McDonald's bought a 9.9% stake in PX1 in 2019 at the same time as acquiring data engine Dynamic Yield. The latter is now for sale, while PX1 provides its services to 58&nbsp;McDonald's country markets, and is expected to add to another eight&nbsp;markets in FY22. PX1's proposition is particularly effective within the&nbsp;Quick Service Restaurant (QSR) sector - a view which is&nbsp;supported by conversations with a&nbsp;McDonald's franchise owner, McDonald's employees, a large QSR brand and industry experts. We assume that PX1's long term contract with McDonald's is worth ~NZ$30m in annual recurring revenue, making up 95% of PX1's total revenue at FY20.&nbsp;


Growing proof points supportive of future contract wins


PX1 secured new contract wins&nbsp;with QSR White Castle and&nbsp;Ahold&nbsp;Delhaize-owned supermarket Super Indo&nbsp;in FY20 leading to 1) an increase in customer numbers, 2) increased visit frequency, 3) higher average transaction values and 4) improved customer satisfaction scores.&nbsp;Specifically, Super Indo achieved&nbsp;107% of its first year registration target within just three&nbsp;months, driven by&nbsp;a&nbsp;+55% increase in average basket size and 42% of app members redeeming&nbsp;in store. There are 16 other brands within the&nbsp;Ahold&nbsp;Delhaize&nbsp;group (total revenue €74.7bn FY20) which in our view presents a natural pipeline of contract opportunities going forward.&nbsp;


Valuation and forecasts undemanding


The market has little visibility on PX1's growth trajectory or revenue breakdown and we believe it is hesitant to reward PX1 with a higher growth rate and subsequent multiple. Beyond PX1's McDonald's contract, we estimate White Castle to generate ~NZ$1.5m of revenue and Super Indo ~NZ$0.5m of revenue per annum. We forecast PX1's FY22 revenue growth to be 15% which we currently believe to be undemanding with upside risk to estimates. PX1 is currently trading on an EV/forward sales multiple of 4.1x, with our target price of NZ$1.58 derived by an EV/sales multiple of 7.1x. We expect future contract wins to be a likely catalyst for the stock.&nbsp;



Jamie Foulkes
jamie.foulkes@forsythbarr.co.nz
+64 4 914 2217





Ashton Olds CFA
ashton.olds@forsythbarr.co.nz
+64 9 368 0127



플렉셔 그룹: 맥플러리 딜을 인내심 있게 기다리다

Plexure Group

플렉셔 그룹: 맥플러리 딜을 인내심 있게 기다리다