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Why there is juice in the Photo-Me growth story
Beaten down photobooths-to-laundry machines operator Photo-Me International’s (PHTM) growth story has been juiced up following its entry into a new and large market.
The acquisition (25 Apr) of 96% of Sempa, a France-based maker of commercialised fresh fruit vending equipment, takes it into the vast $154bn fresh fruit and vegetable juice market, one underpinned by consumers’ increasing focus on health and wellbeing.
Challenging conditions in the UK market have weighed on the share price of Photo-Me, whose latest profit warning was blamed on Brexit-driven consumer uncertainty. Entry into the large juice vending machine market will help diversify the group’s vending operations.
Sempa made €3.7m of pre-tax profit on €9.4m sales in 2018 and the bulk of its revenue is based on recurring annual lease finance contracts. Its net cash position of more than €9m also means the net cash consideration paid by Photo-Me was €11.6m.
Sempa provides a large global market opportunity for Photo-Me, whose management plans to replicate Sempa’s success in France by rolling its equipment out across Photo-Me’s European network.
Following the earnings enhancing deal, FinnCap has upgraded its 2020 earnings per share estimate by 6% to 10p, ahead of 10.4p in 2021.