Welcome to Nobina’s new thread! Nobina released its Q3 interim report today, and the results look delicious. This is the company’s best result ever, and expectations, at least based on the report published by the company, seem very good. Future megatrends, such as sustainable development and urbanization, should help the company gain momentum or, more aptly, put more kilometers on their bus engines.
I have been a shareholder of the company since 2017 and believe that, overall, the company will provide a steady ride as long as it can maintain its profitability. I checked my analyses from 2017 that were behind my investment decision, and I still find them very descriptive:
The industry is really boring, which is why the stock is not closely followed. Pricing errors may occur more easily than in other more closely followed sectors.
The company is the market leader in the Nordics, and no threat is in sight. In such a capital-intensive industry, being a market leader has many benefits, as synergies can be fully realized, and competitors cannot achieve the same.
The financial position and profitability are good. The company generates steady profits, and debt is not excessive. Net debt / EBITDA is currently 2.9, which is at a good level and below the company’s own targets.
Here is a link to the materials published today:
Tell me what thoughts the company evokes in you! I would love to discuss the topic constructively with great company here on the forums. For me, this is about 10% of my portfolio.
{“content”:“So now we’re talking about Sweden’s Onnibus, which is more environmentally friendly than its Finnish counterpart in its choices?”,“target_locale”:“en”}
I wouldn’t compare Nobina to Onnibus. Nobina operates, for example, a significant number of HSL’s local routes, which is a quite different business than Onnibus selling cheap longer bus trips under its own brand. The growth of public transport clearly benefits Nobina, as long as it focuses on bus transport.
In 2018, Nobina divested a significant portion of its intercity bus operations, generating cash from the transaction. Today, the focus is strongly on contract-based transport, particularly fixed-price contracts. As a result, the crisis quarter at the beginning of the year brought a small profit when the market expected a crushing loss, and towards the end of the year, the company has been setting new records in profitability.
The potential for contract-based transport in Sweden for the company is likely already largely exploited, but in other Nordic countries, there are ripe-for-bankruptcy operators to be beaten in tenders, where not only price but also environmental values weigh in the balance. Nobina also demonstrated its ability to be flexible with its contracts, enabled by its financial position, when demand for mobility suddenly disappeared – a fact that will hardly be forgotten when routes are re-tendered. Consolidation in the industry will hopefully awaken after the corona slump, and more M&A news can be expected in the coming years, if not months.
I first bought shares in the company in spring 2019 when I spotted a good dividend company in an easily understandable industry, with excellent growth prospects. This year has been spent buying and selling back and forth, but as a result of the latest quarterly report, this will remain a long-term Hold. The company is still a strong dividend machine once this interim year is over, and after this year, I no longer doubt that the company has a moat against its competitors.
The only thing Nobina and Onnibus’ businesses have in common is that they both operate road transport with seats. Nobina operates solely services purchased by public authorities. Nobina has no business risk from passenger numbers or revenues. Services are provided at a fixed price, and the contracting authority keeps the ticket revenues. Or not quite fixed, as contracts include index clauses, meaning if costs rise, so does the contract price. Onnibus, on the other hand, operates purely market-based services relying on ticket revenues = no passengers = no revenue.