Interesting little speculative broker report pushed out by Shaw & Partners this morning theorising that a currently likely change of government in October in Denmark could lead to an unwinding of the physical parking ticket rules that were enacted on 1 July '25.
Good amount of detail as to how much of a handbrake these laws are to SPZ's Danish profitability as well.
Seems kinda speculative to me? Can't imagine parking laws will be a high priority for a new government, but who knows.
In early 2025, the Danish Ministry of Transport clarified its legal position on private parking rules. Private parking companies, such as SPZ, were generally prohibited from issuing penalties solely by digital communication. Rather, penalty notices must first be issued physically- that is, placed on the car’s windshield. This was a populist measure by the Social Democrats in favour of motorists and in opposition to businesses.
The parking clarification became effective 1 July 2025 (FY26). At the time we became aware of the rule change in early 2025, we lowered and deferred profitability for SPZ in Denmark due to the required increased labour cost. We now model Denmark profitability to ensue from FY29.
Although the value drivers for SPZ remain the UK, US and NZ, there is upside in Denmark if the rules change. A Danish election is to be held no later than 31 October, 2026. The Social Democrats currently have a low approval rating. Private parking regulation could become more business friendly with a new Government.
We, therefore, explore potential upside for SPZ arising from Denmark. No changes in valuation or earnings with this report. Restoring our Denmark earnings to the level prior to the regulatory change would add A$0.20/shr to our valuation. SPZ and other private parking companies have had to hire wardens to administer parking breach notices. This has increase cost and reduced revenue. Labour costs are high in Denmark. With shift premiums, pension, holiday pay, the total cost to SPZ could be over A$60/hour and approximately double SPZ’s opex in that market. Automated Number Plate Recognition (ANPR) systems can monitor hundreds of parking bays with near 100% accuracy. Manual monitoring reduces efficiency by as much as 50% resulting in lost revenue, especially as wardens split time across different parking lots. Therefore, removing the requirement for physical ticketing would transform SPZ’s profitability in Denmark.
SPZ ended FY25 with 48 sites in Denmark issuing over 8,500 PBN’s and generating A$1.3mn of revenue. Prior to the regulatory interpretation in 2025, we regarded Denmark to have high margin and high profit potential. The revenue yield approached A$100/PBN. Also, costs were low because access to the motor vehicle registry attracted no charge for SPZ and communication of breaches to motorists was entirely digital. Prior to the change we projected break-even in FY26.
While the windshield ticking rule is popular with voters, retailers and landowners have expressed concern. Monitoring smaller parking lots may no longer by financially viable under the new regime. Large retailers may see parking lot turnover diminish. Private parking arrangements with landowners often have revenue share clauses. Therefore, a diminishment in parking enforcement can affect landowner/retailer revenue.
We can envision a negotiated outcome. The issue for the current Danish Government was that motorists were complaining of ‘surprise late fees’ associated with parking breaches issued digitally which they were unaware. Resolutions to restore ANPR ticketing may include extending the cooling off or grace period, or reducing the late payment penalty, or requiring more conspicuous digital notifications. The Government already allows digital fines if the motorist uses an app with their licence plate stored on the app. There is current discussion as to whether this can be broadened.
We retain our BUY recommendation. Our DCF-based valuation remains A$1.50. Our valuation translates to 11x FY28 EBITDA (or 20.2x Cash EBITDAx NTM.)
