Initiation: Risks reduced, potential raised
The year or so since RM2’s IPO has been spent establishing robust manufacturing and generating a pipeline of sales leads, some of which have been converted. The next phase of its development is to show that it can deliver and manage its initial substantive contracts. Success here will demonstrate the business model more fully and bring longer-term prospects into clearer focus. We expect RM2 to become EBITDA positive in FY16 and our illustrative DCF values the company at 370p.RM2 International is engaged in developing and selling shipping pallets and to provide related logistical services. Co. has designed and manufactured the BLOCKPal, a multi-trip pallet made of a glass fiber and resin composite, which is suitable for use in both automated and manual areas of the supply chain of sectors, such as fast moving consumer goods, food ingredients, pharmaceuticals and packaging. In addition, Co.'s pallet tracking and management software, the Track Asset, Control Spend (TACS) system offers customers services which can provide real time equipment balances throughout their supply chains.
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