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Original-Research: MBH Corporation plc - von GBC AG

Einstufung von GBC AG zu MBH Corporation plc

Unternehmen: MBH Corporation plc
ISIN: GB00BF1GH114

Anlass der Studie: GBC Management Interview
Empfehlung: Management Interview
Letzte Ratingänderung: 
Analyst: Dario Maugeri, Cosmin Filker

Since March 2020 the corona crisis has led to a negative impact and
uncertainty on the stock market. As consequence, MBH Corporation's shares
have been also affected by the general decline in small cap stocks.
However, as reported in the MBH's statement of mid-March, the drop in the
share price has not impacted either the businesses or the growth through
acquisitions. The business risk is well di-versified between industries and
geographies and allows a certain balance. For example, the current slowdown
in the construction sector might be partly offset by positive impulses in
the vocational training business. GBC analyst Dario Maugeri spoke to Callum
Laing, CEO of MBH Corporation plc, about the current situation:
 
GBC AG: Mr Laing, the corona crisis is producing reorganization and waiting
among companies. Could you briefly give us an idea of the current situation
of your group?
 
Callum Laing: I think there are three different points worth noting in
relation to this crisis and how it impacts MBH.
 
* The companies in the group: All the Principals are very experienced and
successful entrepreneurs and have been through downturns before and are
able to draw on that experience to help them today. They have been working
very closely together, sharing ideas and resources to best help each other
through this situation. Especially when it comes to understanding some of
the government assistance in different countries. It is exactly what we
wanted to see, but it is thrilling and inspiring to see how responsive and
proactive the companies are being, both in their own companies but also to
their sister companies.
 
* Shareholder value as a whole. Remember something like 70% of our
shareholder base is the Principals themselves and they are very committed
to MBH. Our model is very deliberately diversified across countries and
industries to make us more resilient to challenges like this. Also, we do
have an 'unwind' clause in our contracts for companies in their first year
with us. This does give us significant protection, should those companies
run into problems that are too big for them at this time. Ultimately, we
have a buy and hold strategy. We acquire well established businesses and
businesses we believe will still be with us and successful in another 20
years. A bad quarter or even a bad year is a reality for business, but it
does not distract from the broader mission.
 
* The pipeline: Not every company either in our group or in our pipelines
has been negatively impacted by this situation, in fact some are poised to
have their best years ever. We have no shortage of companies in the
pipeline, but we are looking more closely at those that are impacted to
reassure ourselves that if we bring them in today, they have the resources
and the capabilities to still be performing on the other side. Some have
removed themselves from the pipeline so they can focus on today's issues
but will join us at a later stage and that is perfectly understandable.
 
GBC AG: Could you point out some of your businesses particularly impacted
by the corona crisis in this atypical market phase?
 
Callum Laing: It's certainly difficult to do construction on site when
you're not allowed to leave your house. Having said that, demand for
construction, especially amongst retail and F&B is very high whilst things
are quiet so it will be interesting to see how quickly that sector can
spring back when the restrictions are reduced.
 
Other sectors, like Adult Vocational Training have been hit in the short
term, but traditionally where you have a large number of redundancies
people want to retrain and we're quietly confident that there could be some
interesting upside here.
 
Overall, companies are figuring out ways to work more effectively with
their teams, and their clients, using technology and I think those that are
adapting quickly both in MBH and the broader market will be well poised for
growth as things start moving again.
 
GBC AG: In the worst case that the Corona crisis lasts longer than
expected, what effects would this have on your businesses?
 
Callum Laing: All the business owners within the group are working on the
assumption that there will be knock on impacts, periodic restrictions and
other significant effects on the business environment for at least 18
months and I think that is wise. There is no question this is already very
tough on them and their teams. These are good people that often have poured
a lifetime into their careers and businesses it is disconcerting to say the
least to have the ground shift so violently beneath them.
 
But, these are also well established entrepreneurs with a vested stake in
the future, and entrepreneurs tend to work best when there are problems to
be fixed. Some of the companies might look very different in 18 months to
what they do today. And that's not necessarily a bad thing and will be
exciting to see.
 
GBC AG: Mr Laing, many good small businesses are experiencing financial
difficulties these days. This also means opportunities for private equity
investments. How does your accretive acquisition pipeline looks for 2020?
 
Callum Laing: Sadly that is very true. And in fact those companies already
owned by typical Private Equity are most likely to fail because they have
been saddled with such high levels of commercial debt.  Not a model we are
in favour of. We also do not target distressed businesses or 'turn around'
opportunities, that is not our model. We like good, well run, profitable
small businesses. Our pipeline is as full as it's ever been and of course
many of those companies are going to have a bad year this year, but as long
as we believe they have the resources and capabilities to come out of it
the other side, we would look forward to having them in the group.
 
GBC AG: In March, you acquired the UK based company Robinsons Caravans,
which starts the leisure division. Could you offer us an overview of its
business potential and the possible development under the agglomeration
model?
 
Callum Laing: Absolutely. 'Leisure' is a broad term and we have been seeing
some fantastic companies coming to us lately throughout that space.
Robinsons Caravans is a great example of the type of company we like. It
has been around for 53 years and there is no reason to believe it won't
still be helping holiday makers to explore the UK in another 53 years. More
importantly, when talking to the management they were able to show us
clearly what had happened during various downturns in the past such as
events like 9/11. They saw an initial drop off, but then business took off
very strongly. I suspect people will be nervous about travelling overseas
for a while to come and so actually a company like Robinsons Caravans could
be brilliantly placed to serve that market as the restrictions are lifted.
 
GBC AG: Mr Laing, thank you for the interview.

Die vollständige Analyse können Sie hier downloaden:
http://www.more-ir.de/d/20495.pdf

Kontakt für Rückfragen
Jörg Grunwald
Vorstand
GBC AG
Halderstrasse 27
86150 Augsburg
0821 / 241133 0
research@gbc-ag.de
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Offenlegung möglicher Interessenskonflikte nach § 85 WpHG und Art. 20 MAR. Beim oben
analysierten Unternehmen ist folgender möglicher Interessenkonflikt gegeben: (5a,5b,11); Einen
Katalog möglicher Interessenkonflikte finden Sie unter:
http://www.gbc-ag.de/de/Offenlegung
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-------------------übermittelt durch die EQS Group AG.-------------------


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