Pointer Telocation: Improving Top-Line Trend Affected By One-Offs

Published 11/30/2016, 03:06 AM

Pointer Telocation Ltd (NASDAQ:PNTR) is a telematics company with a focus on Israel and Latin America. In addition to sales of its own telematics devices, the group generates high recurring revenues from mobile resource management services. The results for the first nine months support our top-line and normalised full year profit expectations, representing 74-76% of our forecast FY revenue and EBIT. We have nevertheless cut our current year PBT forecast by 6% to account for higher finance and one-off costs. PNTR’s forward P/E discount to the sector has widened from 34% to 37% in recent weeks and we see potential for a re-rating on stronger earnings growth, which should be driven by the recent acquisition of Cielo Telecom in Brazil, a strong pipeline of new products and rising service margins.

Pointer Telocation

Strong top line but sales and marketing costs higher

Pointer Telocation reported a pick-up in third-quarter US dollar revenue growth from the 3% y-o-y in H116 to 9%, reflecting a continuation of mid-teens local currency revenue growth and a stronger trend in Latin American currencies. Good market conditions in Israel, Brazil, Argentina and Mexico helped generate a 14% y-o-y increase in MRM subscribers to 198k while PNTR’s high operating leverage helped drive a 10% higher gross profit. Higher sales and marketing outlays and finance costs resulted in normalised operating profit of $1.8m, up 1% y-o-y, versus the 3% decline in H1. One-off costs of $0.2m related to the CT acquisition and higher financial costs, boosted by forex translation losses, resulted in a 34% y-o-y reduction in US GAAP net profits to $0.7m (H1: $2.3m). Although we have increased our revenue and EBITDA forecasts over 2016-18, adding in the above-mentioned items has reduced our reported PBT forecasts by 7% in 2016 and 2-3% in 2017 and 2018.

To read the entire report Please click on the pdf File Below

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2025 - Fusion Media Limited. All Rights Reserved.