ME International (MEGP) 197.8

Gain to date: 23.8%

We highlighted instant-service equipment maker ME International (MEGP) as a compelling investment opportunity a year ago.

The company, formerly known as Photo-Me International, operates a unique business which generates strong cash flow and high returns on capital.

The firm primarily installs and operates photo booths and laundry machines in high footfall locations in return for a commission or fixed fee, underpinned by long-term relationships with site owners which include food retailers and garage forecourts.

WHAT HAPPENED SINCE WE SAID TO BUY?

The company’s annual results, published on 24 February, showcased another record year of profitability due to the continued rapid expansion of laundry operations and a record pipeline of machine installations with strategic partners.

Revenue from the laundry business increased by 21% to £91 million excluding foreign exchange effects after a record 1,168 machines were installed during the year.

Group revenue and EBITDA (earnings before interest, tax, depreciation, and amortisation) increased by 6.8% and 10% respectively to £307.9 million and £114.2 million.

The group EBITDA margin on sales increased to 37.1% from 35.8% reflecting the expansion of laundry machines, which achieve a higher margin of 51.4%, and the company hiked the annual dividend by 6.8% to 7.9p per share.

On 27 February, there was a placing of 26.5 million shares (7% of the issued capital) held by private equity investor Montefiore Capital, at a price of 200p per share or a 9% discount to the prior closing price.

The sale took Montefiore’s holding down to 5% and partially removed the overhang, while investment manager Abrdn (ABDN) became a new 5% shareholder.

WHAT SHOULD INVESTORS DO NOW?

We remain happy holders in a growing business which is becoming more profitable due to the superior economics of the laundry business. This should provide strong cash flows to fund growth as well as shareholder returns.

‹ Previous2025-03-06Next ›