Pinned straw:
$SPZ held their AGM this morning.
A few positive updates, with the two key slides added below:
- 1Q FY25 is off to a good start: revenue up 24% and Adjusted EBITDA up 30%, both to PCP
- The 1500 site YE target has been achieved ahead of plan (1529 at 15 Nov) - note this targt had been accelerated from EOFY25
- A new long term target to achieve 3000 organic sites, doubling the business, by December 2028
CEO Paul noted that it's taken them 10 years to get to 1500 sites, and they now aim to add the next 1500 in 4 years.
Work on new markets in Scandinavia and the US (Texas, Florida) is progressing. Focus is now on finding the right entry point.
Demark is off to the races with contracts being signed.
UK - single industry code of practice agreed, no issues flagged under the Labour Government - regualtory environment appears stable for now. Paul thinks the Government will now monitor and see how the industry functions under the unified code.
Churn remains low at 30-40 site p.a.: mix of site redevelopments, exits initiated by $SPZ, and some losses to competitors.
Conversations under way with the new QLD LNP Government - warm but non-specific noises. Expecting movement in the New Year. Paul said he is confident they will return.
Overall, this is a company that is continuing to deliver, with a management who appear confident across all markets, with a clear focus on both operational delivery and growth.
On Valuation:
Market likes today's update. With SP at time of writing at $0.82, getting towards the upper end of my valuation. So, at 3.8% in RL, I'm a hold here. Need to update valuation in the light of the 3000-Dec. 2028 growth target.
Disc: Held in Rl and SM
@mikebrisy I dialled in too and our notes are almost identical.
Based on their comments, definitely sounds like we will see acquisitions in either Florida or Texas in FY25. I like their measured expansion into new jurisdictions, they continue to find the right balance in my view -- don't overextend, but don't get too comfortable slowing growing in the jurisdictions they are already in. That said, I would rather see the former prioritised more than anything. Their is plenty of runway ahead in all markets they currently operate in, so their is no rush to expand into new areas.
Their experience in Germany sounds like it has been an interesting one. I am a fan of the fact they admit they would do some things differently and have learnt plenty along the way. They don't sound too stubborn in that they acknowledged things could work better by operating in a different way and it sounds like they pivoted as a result. That's a big tick in my books.
I will post a straw with some historical figures later today, which I think demonstrates how impressive this business has performed over the last few years. If we continue to see revenue growth around the 20% mark YoY, with ROE >20, I am confident they will continue to scale well and grow themselves towards a 500m market cap company, and on their current trajectory, a company that is worth 1 billion. Perhaps seems a little crazy now, but extrapolate the same performance out another five years, without any significant hurdles, and it is achievable.