Fill Up Media: Feedback from the Lyon Pôle bourse Forum part 2

Fill up Media : the JC Decaux of petrol stations and commercial centers

Fill Up Media is a micro cap (so beware of liquidity) with a market cap of 25 M€ (8,8€ share price). The four founders own 34,8%. They deploy screens in petrol stations which display advertisement (screens belong to them) and of commercial centers (my understanding it that the screens are those of the commercial center). Advertisements are sold to local (plumbers, restaurants…) and national announcers.

They are diversifying their partnerships through the recent deals they have signed to manage the screens in commercial centers. It also gives them access to different partners, a different viewership in a different context and finally it adds to the number of potential viewers.

There initial partnership with Carrefour (for their petrol stations) was extended for another 9 years (previous deal was for 6 years). They will announce a new partnership in the coming weeks.

The immobilized R&D (0,7 M€) is at its peak level, we will not see any increase in the future. The R&D is linked to the box which protects the screen and improves the sound. The boxes are now made in Inox in order to resist to the oil vapor.

The real estate, which is the home to the headquarters of the company, is not owned by the company but by a company owned by the four founders. Rents are at market price and the building is 85% occupied. The occupation rate should be at 110% by 2025. The real estate does not belong to the company as the founders didn’t want to encumber the company with this capex. In France this approach is used quite often yet I am not a fan.

A commercial director was hired in order to better master the national announcers and to be closer to Paris where a presence is required to get some business done and to have a better exposure.

Margins are identical both for local and national announcers.

30% of clients remain on a regular basis. They aim to get that number up to 40%. With the commercial director, the sales team must now go and see the clients twice a year. They have set up a loyalty program where the client can either have one month off or have some additional ads for free. The commercial director focuses on the big accounts.

Their first partner is Carrefour with 33%.

It cost 3 M€ to set up 1000 screens in 100 petrol stations.

The Pareto law applies to petrol stations. Fill Up Media aims the 20% top petrol stations which have 80% of the business. They have 30 to 40% of these top petrol stations.

Relationship with the partners 5carrefour, Total…) are very good. As a reminder these partners have a percentage of the sales done by Fill up Media so they will benefit from Fill Up Media’s growth. Partners have indicated that they saw an upstick of frequentation in their shops due to the ads (10 to 15%).

They have a 2,7 M€ net cash position. They will not do any capital increase to finance growth. My understanding is that this concerns the near future. As a reminder, their IPO was done at 10 €. I do not see them doing anything below that price and will aim for a higher share price if they were to do

something.

If they do some external growth, it will be to go in a new country (Germany or Spain).

As to why their share price went down quite a bit (towards 4,8 €), a historical shareholder needed to sell straight away and is seems that his or her selling has stopped.

Management is dynamic and answered to all the tough questions. Let us not forget though that capex will be needed to keep expanding the footprint in the petrol stations. The screens have their sound cut off during weekends (to respect the neighborhood) which is a pity. I understand what they are doing (selling adds on screens in locations which the biggest actors such as JCDecaux didn’t think about or because the market is too small) and I could see their products.

But at the current price I do not have a big enough margin of safety. The deployment of 2000 new screens in 250 petrol stations will require an investment of approximately 6,5 M€ (as a reminder they have a 2,7M€ net cash position). I got this amount by using their estimates of 3 M€ for 100 petrol stations. Leverage can be used to finance this growth. Nevertheless, at one point, in my opinion they will need to do a capital raise (at a higher price than the initial ipo) which will also help liquidity. Factoring represents 1,8M€ and helps them get cash faster.

As a reminder, they are aiming to have 550 additional petrol stations by 2025 and a 40% sales growth per year from 2021 to 2025. The financing of the equipment of the petrol stations as well as sales growth can be two indicators to monitor.

Cheers!

Jeremy

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Disclaimer: The above article constitutes the authors’ personal views and is for entertainment purposes only. It is not to be construed as financial advice in any shape or form. Please do your own research and seek your own advice from a qualified financial advisor. The author may from time to time hold positions in the aforementioned stocks consistent with the views and opinions expressed in this article. Disclosure – I do not hold a position in Fill Up Media at the time of publishing this article (this is a disclosure and NOT A RECOMMENDATION).