ACX Research 02 May 2014

Miko NV
Price Market cap (m) Enterprise value (m) Free float Daily val traded (m) 66.01 82.3 94.4 40.4% Low

Summary company financials (m) Year end December FY2011 FY2012 FY2013 FY2014E Revenue 130.3 138.2 148.6 156.0
Revenue growth 10.6% 6.0% 7.5% 5.0%

EBITDA
EBITDA margin

15.1
11.6%

16.3
11.8%

17.5
11.8%

20.2
12.9%

Net income Net debt (cash) Shares outstanding EV/Sales EV/EBITDA PE Mcap / Book val

5.5 7.5 1.24 0.50 4.3 10.2 0.98

6.4 3.9 1.24 0.49 4.2 9.8 0.98

7.1 15.8 1.25 0.65 5.6 11.3 1.20

9.2 12.1 1.25 0.61 4.7 9.0 1.08

Miko NV is a pan-European group operating in two distinct areas. Miko derives 52% of revenue from the rental of coffee machines and coffee products to corporations "Miko Coffee", and the remaining 48% of revenue is derived from the injection moulding and thermoforming manufacture of plastic packaging products, primarily for the ice cream industry, "Miko Pac". Miko NV has a satisfactory track record, having grown revenues by an average of 7% per annum over the last 8 years without share issuance or increased indebtedness. Over this time, within the context of limited European economic growth, Miko's EBITDA margins have however reduced from 15.3% to 11.8%. Miko is 55% owned by the Michielsen family, who began roasting and selling coffee in 1801. After Miko's initial public offering in 1998 the Michielsen family kept possession of 55% Miko's shares. Miko has net debt at 0.2x EBITDA, an 82m market capitalisation, and trades at 0.61x Enterprise Value to Revenue and 9.0x PE for the year to December 2014. The distribution of Miko NV's revenue is broadly spread across Europe, with the three largest regions being Belgium, Germany and the United Kingdom, each representing 20% of group revenue. Miko's coffee service division has achieved marginally higher growth rates than plastic packaging, and appears to be the group's focus in terms of acquisitions. Miko spent 12.9m on acquisitions of three coffee companies in 2013, acquiring 13.7m of revenue (acquisition metric 0.94x Enterprise Value to Revenue). Of Miko's c.77m revenue in 2013 from its coffee division, 4.2m came from the rental of coffee service machines to corporates, the remainder of revenue derived from the sale of coffee products. The coffee segment's EBIT margins have reduced from 6.5% in 2008 to below 5% in 2013, and may offer recovery potential as the European economy improves. Miko's other division, plastics, has its origins at the world exhibition of Brussels in 1958 when Miko launched the single-headed coffee filter. The filter body, which was made of plastic, had to be able to withstand the temperature of the boiling water used to make coffee. Because no suitable technology existed yet, Miko developed it itself. The material polypropylene was selected. The new expertise that Miko gathered through this process was quickly applied to producing plastic packaging. Thus the plastics department grew into the second core activity of the group. Miko's plastic packaging segment now however produces plastic packaging for a broad range of industries including food and cosmetics, and derives 50% of revenue from customers in the ice cream sector. The plastics segment uses both injection moulding and theroforming production techniques and has some history of innovation in production techniques. The steady growth of Miko Pac has led to the company expanding to a new Polish production factory in 2012. Miko plastics has typically delivered stable EBIT margins at around 10% of sales and appears to be well managed. One point of note is that the largest customer of the plasics division is disclosed as generating 23m of revenue, 15% of group total revenue. Overall we see Miko as a competently managed, stable group, available at less than 10x PE and which may re-rate over the years as margins improve to historic levels and the size of the group continues to grow. Trading liquidity is, however, limited, and the potential investment is suitable for long term holders comfortable with holding potentially illquid blocks.

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