'Walking the talk' - another good deal
Xpediator (XPD) is an integrated freight management business. The Group has three main business areas: freight forwarding services, logistics and warehousing and transport services. Revenues are derived from the UK (23.5% of Group revenue), CEE and Baltic states (76.5%).XPD has announced that it has acquired Anglia Forwarding Group (‘Anglia’), its third purchase since IPO last year. We anticipate strong scope for integration benefits, some of which are likely to emerge in the very short-term, not least the move of the Group’s export freight consolidation base into Anglia’s main warehouse facility.
In addition, there is significant scope for cross-selling between the businesses, particularly in the US, utilising the acquired business’ presence in air and sea freight, and in the Midlands. Anglia also has strong European road freight links, notably in Germany, which can be developed further.
Anglia is a founding member of United Shipping, which is a worldwide network of independently owned and locally operated freight forwarders and customs brokers, focused predominantly on air and sea freight. This relationship potentially opens an extensive customer base globally, which we expect to be linked with Regional Express’ association with Amazon, where the Group has over 1,000 customers in the USA.
We see a positive impact of the acquisition on our forecasts and, after taking into account the recent FY2017 results and trading comments, raise our EPS estimates by 2.8% in FY2018F and by 2.3% in FY2019F. Using our previous valuation methodologies, a share price of 74.5p appears merited.
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