COMPANY HIGHLIGHTS excerpts:
ASBISc has grown revenues and earnings in recent years, and is, in our view, well positioned for continued growth. The company has expanded its gross margin by more than 100 basis points over the past two years, supported by strong sales of private-label products, distribution efficiencies, and the increased use of e-commerce. Despite a near tripling in ASBISc’s stock price year-to-date, we believe the current valuation remains compelling based on multiple metrics and does not fairly reflect the company’s strong underlying fundamentals. Its recent market capitalization of approximately $340 million — 1.3 billion Polish zloty (PLN) — implies a multiple of approximately 0.2-times 2020 revenue, below the average multiple of 0.3 for our group of global electronics-distribution peers. At current levels, the trailing P/E ratio of 9.5-times is also well below the peer average of 16-times.
INVESTMENT THESIS excerpts:
Although the pandemic caused widespread industry disruption in 2020, leading many businesses to close, ASBISc was able to meet customer needs for digital and remote connectivity technologies. We believe this is reflected in the company’s positive revenue growth in all four quarters of 2020, including the difficult second quarter, when revenue rose 2%. In our view, the subsequent 34% growth in 3Q, 30% growth in 4Q, and 47% growth in 1Q 2021 highlight the resiliency and underlying strength of ASBISc’s business.
We believe that ASBISc benefits from the strong relationships it has developed with key IT vendors over the past 30 years, and from its presence in many emerging global markets. We expect demand for computer products in these markets to continue to grow rapidly, and see opportunities for the company to expand further in Africa and Asia.
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