A2NB01 1Spatial

Edison issues outlook on 1Spatial (SPA)

Edison Investment Research Limited
Edison issues outlook on 1Spatial (SPA)

22-Jan-2019 / 13:02 GMT/BST

London, UK, 22 January 2019

Edison issues outlook on 1Spatial (SPA)

1Spatial's (SPA) transition plan appears to be on track. Recent contract wins, US trends and mobile solutions should both sustain growth and ensure it reaches profitability and positive free cash flow targets. In the longer term, its ambition to become a leading location master data management (LMDM) supplier has the potential to enhance both its competitive position and strategic value. Success is not guaranteed but we would argue that, trading at 1.3x FY21e EV/sales, nor is it factored into the valuation.

Putting 1Spatial on a sector average FY21e EV/sales multiple of 2.2x (currently 1.3x) would imply a share price of 50p, 55% above the current price. Execution on the LMDM opportunity could create significant strategic value beyond even this level. However, it may take time to deliver this upside. A re-rating is likely to require lifting margins closer to the sector average and the full size of 1Spatial's LMDM opportunity is unlikely to become apparent in the next 12 months, in our view.

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