LONDON, April 21, 2015 /PRNewswire/ --
Edison Investment Research, a leading international investment research firm, announces the initiation of full coverage of RM2 International
Highlights of the analysis on RM2 International by Edison's Industrials analysts Toby Thorrington and Roger Johnston include:
RM2 has developed an innovative pallet design using pultruded glass-reinforced resin components. It has invested in significant manufacturing capability in Canada and is in the process of ramping-up production to meet long-term scalable contracts announced in December 2014. The long-term strategy is to build a high-quality revenue stream from the deployment of pallet pools managed on behalf of clients as an integral part of their upstream supply chains.
RM2 listed on AIM with an 88p admission price. Its share price currently sits towards the lower end of its trading range since that time, most likely reflecting slower contract build-up than originally envisaged. Near-term financials do not lend themselves to the use of conventional earnings multiples, though note that we expect EBITDA to approach break even in FY15 before turning sharply positive in FY16, giving an EV/EBITDA of 8.8x for that year. Taking a longer view, our 10-year DCF illustration generates an equity valuation of 370p for RM2. This is sensitive to revenue assumptions in particular, but once announced contracts are fully up and running we will be in a better position to benchmark the variables used.
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About Edison: Edison, the investment intelligence firm, is the future of investor interaction with corporates. Our team of over 100 analysts and investment professionals works with leading companies, fund managers and investment banks worldwide to support its capital markets activity. We provide services to more than 400 retained corporate and investor clients from our offices in London, New York, Frankfurt, Sydney and Wellington. Edison is authorised and regulated by the Financial Conduct Authority (http://www.fsa.gov.uk/register/firmBasicDetails.do?sid=181584).
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For more information please contact:
Toby Thorrington, Edison Investment Research, +44(0)20-3077-5721
Roger Johnston, Edison Investment Research, +44(0)20-3077-5722
SOURCE Edison Investment Research