Let’s boldly open a thread for a company that is considered to operate in a dying market. Or is it?
I researched Zwipe in more detail over the weekend, and it has connections to Loomis, so I wanted to open this up to a larger audience.
"Loomis is the only international listed company that specializes exclusively in cash handling. Our services reduce the risks associated with the transportation and handling of cash, payment instruments, and various valuable shipments.
Cash remains one of the most popular payment methods, and its amount in Finland has not changed significantly during the euro era. Cash is an easy, reliable, and anonymous payment method, whose unit costs are low compared to other payment methods."
Over the past 160 years, Loomis has evolved into an international industry leader in the United States and Europe.
Wells Fargo & Co and Loomis Armored Services merged in 1997, through which the company’s history extends back to 1852 during the gold rush, when the task was to secure mining traffic and develop ever better methods for safe transport. In 1905, Lee Loomis founded the Cleary Creek Commercial Company, which transported supplies to Alaskan miners by dog sled and brought gold back as a return load.
Loomis AB is a public limited company listed on the Stockholm Stock Exchange (Nasdaq Stockholm Stock Exchange), in the Nordic Large Cap List.
Stock price before corona 382.32SEK (17.2.2020)
Stock price now 216.80SEK (18.1.2021)
I myself added the company to my portfolio during spring-summer. I have been more or less involved in money traffic in my working life, and Loomis has been the most common party used for cash transport/storage. Cash has long been considered a disappearing natural resource, but statistics even speak against this. Here I have noticed a personal Peter Lynch-like experience, for example, in the spring when the use of cash was asked to be avoided, and at my workplace, its use significantly increased. The proliferation of mobile payments and the shift of purchases from brick-and-mortar stores to online stores are forces driving this business down.
Amount of cash continues to rise
"However, an interesting point is the reference to a UBS study from a year ago. It found that cash usage had increased in all 21 countries surveyed – with the sole exception of Sweden. In most countries, cash usage even grew in relation to GDP.
Even central bank statistics do not support the death of cash one bit. Its amount in circulation has continued to grow in the world’s largest economies [the United States] and [the Eurozone], even though they are at the forefront of payment technology development.
In Sweden, too, a high-level supported popular movement has emerged to preserve cash. Three out of four Swedes support the demand."
Quote from a stock market hawk article 12.5.2020 Pörssihaukka | Käteinen ei kuole – tai edes yski - Pörssihaukka %
Amount of cash in circulation
In the United States
In the Eurozone Circulation
"Many people still favor cash for emotional reasons or to better control their spending. A parallel payment method also provides protection against digital system failures.
In the long term, the position of cash will certainly decline in relation to digital payments. But its disappearance is not even close, or will ever materialize, at this point."
Share value
Talousmentor (Financial Mentor) has calculated the share value on 11.12.2020 as 325.71SEK. The link provides more detailed grounds for the valuation.
https://www.piksu.com/talousmentor/pdf/loomis-2020-12-11.pdf
On 26.11.2020, Handelsbanken raised Loomis’ target price from 250SEK to 290SEK. The stock price at that time was approximately 253SEK and the estimated P/E for 2021 was 10.7.
Loomis Pay
"Loomis continues to implement its current strategy by offering its customers a comprehensive service in the future, including digital payment methods in addition to cash.
LOOMIS PAY is primarily a service offered to small and medium-sized businesses, where our customer gets access to all common payment methods, from cash to cards and mobile payments, with a single contract. LOOMIS PAY enables our customers to use cash as an easy and secure payment method alongside digital payment methods also in the future.
LOOMIS PAY will be launched first in Denmark this year and in other Nordic countries during 2021."
Loomis is thus also incorporating digital payment methods as part of its service offering. I opened the thread’s introduction with the company’s history because the company has previously been able to adapt to the development of the times, from securing mining traffic and transporting gold/supplies to providing and securing cash traffic.
At the end of 2020, Loomis acquired Automatia Pankkiautomaatit Oy from Danske, Nordea, and OP. Through this, the company will certainly be better able to monitor the need for cash services.
This is certainly a controversial investment target, but I wanted to bring it to general awareness and hopefully spark discussion for and against it. This is not a buy recommendation, and the company is in my own portfolio. However, I see opportunities in this case in the coming years. Patience has been and will surely continue to be required with this. Q2/2020 was dismal, the effects of corona were significant. Q3/2020, however, already showed a turn for the better.