Balimoney schreef op 19 juni 2012 09:18:
High Business Solutions growth expected
TomTom (Accumulate): High Business Solutions growth expected
The facts: A Dutch daily has interviewed an executive at TomTom responsible for Business Solutions. The executive is quoted as saying that growth for TomTom Business Solutions will be twice as high as market growth and that growth in 2012 will be between 30-40%. This executive also stated that penetration of fleet management systems is at 5-20% (depending on the country) in the case of a professionally managed commercial fleet of vehicles. In both Europe and North America, the executive estimates that there are roughly 30m commercial vehicles on the road currently. The executive is also saying that the market remains fragmented and that few competitors operate internationally.
Our analysis: The growth target of between 30% and 40% is higher than what we currently take into account. Growth in 1Q12 was just 14% while we take into account growth of 26% for the full year. We are aware of higher marketing efforts and a market that is more open to fleet management solutions (because the pay back period is really short and savings can be significant) but the upper end of the range (40%) is significantly higher than what we have pencilled in. Using a 40% growth target would add EUR 12m in revenues.
With regards to the fragmentation of the market we do note that consolidation has accelerated in the last 12 months as both strategic deals have been struck and private equity has taken positions. As such, competition is expected to increase going forward although the market still remains fragmented.
Conclusion & Action: The statements by the TomTom executive about the growth in Business Solutions is positive, as are the statements on the current penetration levels and the fragmentation of the market. We do not upgrade our estimates yet, but will await confirmation at the 1H12 earnings release.