Loomis AB (LOOMIS AB; NR/BBB) Final Asides

exp. €300m 5Y SLB Final Guidance MS+125-30 WPR vs. FV +120 (5-10bp NIC)

• books>€1.2b, -30 in from IPT
• May show some value for those excluded from Tobacco

• So to clarify "cash in circulation continues to rise" is true on global economic growth and inflation that is helping offset declining usage (measured as % of transactions). It was the "cash continues to have significant share of total payment volume" that we questioned.
• No. 1 player in cash handling is Brinks {BCO US Equity} that is twice the size of Loomis, has seen similar firm growth (7-8% last two years) but on higher margins (EBITA in 13% handle) and differentiates itself on geographical diversification with LATAM exposure at 27% of group. Loomis does spend a tad more on capex (as % of revenue) at 5-7% in recent yrs vs. Brinks in 4%. This line does come with CoC put at par - worth noting given we might see industry consolidation.
• S&P notes "The company provides its services through medium- to long-term contracts that generally include a combination of fixed- and volume-based pricing components.". It would have been nice to see contract maturity profile and what concentration risk is like to clients.
• We assume PSGSM 29s don't trade but obviously rotating out of that into this screens value. Its #3 player in cash handling and makes up 43% of the business - rest mostly in security services. It runs similar margins to Securitas, cash is the higher margin business as expected.
• UoP here is GCP, refinance existing debt. There were no major maturities this year so we assume its referring to the €210m in loans coming due next year. Regardless looks like some net supply here. Wea re not too concerned given where leverage is.