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Added one year ago

Kinda like Bapcor in that they provide after-market parts, but with a focus on commercial vehicle fleets (trucks, buses etc)

Operating largely through the Multispares Brand, the company has nearly tripled per share earnings in the last 5 years

It has paid a consistent and rising dividend, with a giant special dividend in 2015. Actually, it’s paid $1.74 in dividends since 2013. So if you bought shares back then your entire cost base has been covered. (could have bought at $1.50)

Of course your shares have gone up more then 5x since then too.

Sales up 18% in the last year, and has proven to be a very resliant business (they are critical to road transport supply chains)

The increasing diversity of the national commercial vehicle fleet, and long and complex supply chains, while challenging actually provides a competitive advantage to those with scale and strong inventory management, as SNL do.

They have recently invested into even more into capacity recently, and will soon have distribution centres able to accommodate $250m in annual turnover (compared to $150m at present). 

The company previously beat its latest 3 year plan, and for the next target they have set $200m in sales by FY24, which seems conservative from the current $163m.

Management and directors currently hold 10% or so of the business, but around 30% is held by the Forsyth family (i think it's the brothert of the current chairman).

One to keep on the watchlist. 

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Valuation of $7.14
Added one year ago
The company's previous 3 year plan targeted $150m in revenue for 2022, which it met a full year early. The business now has its eyes on $200m by FY24, which actually seems pretty conservative (only ~7%pa growth) Anyway, they delivered an 8.5% net margin last year, up from ~7% in prior years. I'll assume 8% for FY24 and 41m shares on issue (which have been flat for years, and the business is very comfortably self-funded), i get a FY24 EPS of ~40c. That's only 6% annual growth. Although you'd be getting a starting yield of ~2.5% fully franked (3.6% gross). As i say, very undemanding, and well below what the business had achieved historically (EPS have tripled in the last 3 years). Yes, the business is more mature, but even with system growth alone you'd think they'd get a good way to their target. At any rate, going with the targeted results, it's hard to justify the current PE of 24. (with current share price of $8.30) Also worth noting that despite the company's long history of strong growth, it's never really attracted a particularly high PE. That's very likely to do with the rather low liquidity and free float (shares that are available to trade). A few thousand shares trade hands each day, and are tightly held by insiders. So the current level is a bit of an exception to the rule. As always, sentiment can always drive this up a lot higher, but i'd be reluctant to rely too much on further multiple expansion to drive my returns. This is a super high quality company; i think it will be around for a long time and continue to deliver very dependable -- albeit not fast paced -- growth. But even if i assume FY24 EPS of 45c and a PE of 20, i get a target price of $9, or $7.14 if discounted back by 8% per year (i'll use a lower discount rate to allow for the 2.5% starting yield). I wanted to buy this years ago, but have always held back on the price. It's been a costly omission, but i'd still prefer to wait for a lower price before buying a significant stake. Given the right opportunity, I'd be happy to buy a lot of this company
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Valuation of $7.47
Added 2 years ago
08-Apr-2020: My old 12 month PT for SNL (in early 2018) was $3.77. They got there pretty damn quick. Then, in October 2019, I raised my PT for SNL to $4.80. They had been knocking on the door of $5 back in July/August 2018 (and getting back up there in October and November 2018 as well) , and they're a better company now than they were then. No reason they can't get back up there. It will just take time. Good management. Conservative. Very clear-cut accounts with no bull. Very solid balance sheet. The BAP of trucks and buses. While their dividend yield has been low, they like to raise their divs every year (this year will be an exception due to COVID-19). SNL are the quiet achievers. They just keep on making good decisions and doing what they do well. Busses aren't too busy right now, but they'll be back. The trucks keep rolling though. And they still need parts. And that's what SNL's Multispares stores provide. A word of warning however - they are thinly traded - so low liquidity. 07-Oct-2020: Slight increase in my valuation for SNL. They have done well through the pandemic, as I expected they would. I imagine $5 represents resistance, and once they punch through $5 they could go for a run, but I'm not sure what the catalyst will be to drive them through $5 with conviction. I think they might bounce off $5 a couple of times first. I'm confident that they'll be trading significantly higher in 5 years however. They are a quality company, just not much liquidity sometimes with their shares. 08-Apr-2021: Update: Didn't they just SMASH right through that $4.98 price target. I talked above about them bouncing off that $5 level a couple of times before taking off. They actually burst through it and then bounced off it ($5) from above, twice. So got it right, sort of... Anyway, here they are now knocking on the door of $7. I reckon they'll burst through that and all. Which probably means they won't. But let's go with $7.49 as my new price target for SNL (the BAP of trucks and buses), which is exactly 50% higher than my last one (which was $4.98). Great company actually. Wish I held them...
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#Bull Case
Last edited 3 years ago

Operating under the Multispares brand, the company sells aftermarket truck and bus parts in Australia and New Zealand. The real value proposition is the related services Supply Network provides: everything from parts interpreting, supply management, procurement and problem solving.

The company targets the premium end of the market, where customers value reliability, quality and expertise over price. That focus has helped it develop strong and enduring relationships, with the business having a well-earned reputation for excellence.

Importantly, the business has a strong track record of growth and solid shareholder returns.

Very similar to Bapcor in many ways, including an aligned and shareholder focused management team. And one that has shown exceptional capital allocation decisions and long-term thinking.

This isnt a sexy tech stock likely to grow at high double digit rates -- but investors can expect upper single digit growth for the foreseeable future, and dependable dividends.

Purchased at the right price, it should deliver exceptional long-term returns. Indeed, average shareholder returns can be seen below:


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