Avigilon - UW Stock Pitch Competition

Report
UWFA Stock Pitch
Competition:
Avigilon (TSX: AVO)
March 8, 2014
Presented by:
Varun Bhambhani and Irene Liu
Introduction
Company Description
Avigilon (TSX: AVO) is a Canadian-based
manufacturer of high definition and megapixel
network-based video surveillance systems and
equipment for the security market worldwide. The
company was incorporated in 2004.
Avigilon’s system is promoted by its sales staff
and sold through a global network of security
installers and dealers.
Key Financials
•
•
•
•
•
•
•
•
•
•
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Product Lines
•
•
•
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Video management software
High-definition IP cameras
Recording hardware
System accessories
Share Price:
Market Cap:
Enterprise Value:
Revenue LTM:
EBITDA Margin:
Capital Structure:
Shares out. (mm):
52 wk High/Low:
Diluted EPS:
Dividend Yield %:
Beta:
$31.83
$1.37B
$1.26B
$155.1M
16%
100% Equity
43.0
34.5/11.011
0.45
N/A
1.36
Normalized Performance
800
700
600
500
400
300
200
100
0
SPX Index
AVO
Company Overview
YoY Revenue
Management Team
Revenue (in millions CAD)
Annual Revenue
200
180
160
140
120
100
80
60
40
20
2008
2009
2010
2011
2012
2013
in millions CAD
Revenue by Region
100
90
80
70
60
50
40
30
20
10
-
2011
2012
Alexander
Fernandez,
Founder & CEO
Company
Overview
US
UK
EMEA
Asia
Pacific
Investment
Thesis
Bryan Schmode,
COO
Name
Background
Alexander Fernandez
Previous success with Qimaging
Brad Bardua
Previously CFO of Gateway Casinos
Group, where the executive team
grew revenue from $80 to $250
million in a short amount of time
Bryan Schmode
Over 15 yrs of experience in the
industry; instrumental in success of
companies such as Broadware
2013
Canada
Brad Bardua,
CFO
Latin
America
Macro Outlook
Catalysts &
Risks
Valuation
Investment Thesis
1. Strong revenue growth driven by expansion into US & other geographic regions
2. Avigilon’s recent acquisitions of VideoIQ and RedCloud will drive growth in 2014 and
beyond
3. As one of the few end-to-end solution providers, Avigilon will maintain an edge over
competitors
Company
Overview
Investment
Thesis
Macro Outlook
Catalysts &
Risks
Valuation
Macro Outlook
The global market for video surveillance equipment is expected to grow by more than 12% in 2014, as
per a study conducted by HIS, a global think tank
There is push towards video data analytics; the ability to differentiate products will be important in 2014.
The rising use of big data means that cloud computing would become more prevalent.
Governments across the globe have been increasing their budgets for video surveillance, which will
drive growth in this industry in 2014.
180/360 degree panoramic network cameras will be high demand with global unit shipment forecast to
increase by more than 60% YoY
Company
Overview
Investment
Thesis
Macro Outlook
Catalysts &
Risks
Valuation
Catalysts & Risks
Catalysts
Successful integration and synergy from acquisition of VideoIQ: VideoIQ provides analytics and
active learning technology that detects intrusion from video surveillance without human involvement.
This has the potential to become a selling factor for Avigilon.
Major contract wins and global expansion: Avigilon has been focusing on expanding the reach of
its products in the US and EMEA.
End-to-end solution: Avigilon provides end-to-end solution to its customers, which is a significant
advantage over competitors who only provide either the software or hardware for video surveillance.
Risks
Large competitors: Avigilon’s competitors have a much greater scale, which could impact its ability to
compete at the global stage.
Ability to innovate: Given that video surveillance can essentially be considered a commodity, Avigilon
needs to continue to innovate in order to set the brand apart from its competitors.
M&A Integration: There is a risk that the integration of VideoIQ and RedCloud (both acquired in 2013)
might not go smoothly and it can impact Avigilon’s ability to leverage the synergies.
Company
Overview
Investment
Thesis
Macro Outlook
Catalysts &
Risks
Valuation
Valuation - DCF
Company
Overview
Investment
Thesis
Macro Outlook
Catalysts &
Risks
Valuation
Valuation - DCF
Company
Overview
Investment
Thesis
Macro Outlook
Catalysts &
Risks
Valuation
Valuation – Trading Comparables
Comparables Universe
Company
Overview
Investment
Thesis
Macro Outlook
Catalysts &
Risks
Valuation
Recommendation
Football Field
Entry & Exit Strategy
52-week
DCF
0
10
20
30
40
50
60
70
Entry Price:
Market Price
Target Price:
$40.43
Price Upside:
27%
Time Horizon:
12 months
Stop Loss:
$20
1. Strong revenue growth driven by expansion into US & other geographic regions
2. Avigilon’s recent acquisitions of VideoIQ and RedCloud will drive growth in 2014 and
beyond
3. As one of the few end-to-end solution providers, Avigilon will maintain an edge over
competitors
Company
Overview
Investment
Thesis
Macro Outlook
Catalysts &
Risks
Valuation

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