De La Rue plc (DLAR.L) | Investment Case

1. Company Snapshot

1.a. Company Description

De La Rue plc designs, manufactures, and delivers banknotes in the United Kingdom, the Middle East, Africa, Asia, the Americas, Rest of Europe, and internationally.It operates through Currency, Authentication, and Identity Solutions.The company offers printed banknotes, and polymer and security features.

It also provides range of physical solutions, such as tax stamps, authentication labels, and cheques and bank cards, as well as ID security components, including polycarbonate.In addition, it offers digital solutions, such as DLR Certify, a government revenue solution; and Tracelogy for brand protection, as well as licensing platform.Further, the company provides trading and non-trading, as well as insurance services.

It serves the governments, central banks, and commercial organizations.The company was founded in 1813 and is headquartered in Basingstoke, the United Kingdom.

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1.b. Last Insights on DLAR

De La Rue plc's recent performance was driven by the company's acceptance of a £263 million takeover bid by US private equity firm Atlas Holdings. This strategic move is expected to provide a 16% premium to shareholders, marking a significant development in the company's history. Additionally, the company's authentication division will not be included in the deal, allowing De La Rue to maintain its core business operations.

1.c. Company Highlights

Last Price	130
Change Percentage	0.39%
Open	130
Previous Close	130
Market Cap ( Millions)	255
Volume	5576178
Year High	133.5
Year Low	79.6
M A 50	129
M A 200	113.44

FCF Yield	3.52%
Dividend Yield	0.00%
ROE	-533.33%
Debt / Equity	-1110.34%
Net Debt / EBIDTA	430.74%
Price To Book	-21.93
Price Earnings Ratio	-12.72
Price To FCF	28.37
Price To sales	0.82
EV / EBITDA	15.36

2. Transcript Summary

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3. NewsRoom

The Top 5 Analyst Questions From Crane NXT’s Q2 Earnings Call

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (2.77%)

6. Segments

Currency

Expected Growth: 2.5%

De La Rue plc's 2.5% currency growth is driven by increasing demand for secure currency solutions, growth in emerging markets, and a shift towards polymer banknotes. Additionally, the company's innovative products and services, such as anti-counterfeiting features and cash management solutions, contribute to its growth.

Authentication

Expected Growth: 3.5%

De La Rue plc's 3.5% growth in Authentication is driven by increasing demand for secure identity verification, growth in e-passport adoption, and expansion in emerging markets. Additionally, the company's investments in digital technologies, such as biometric authentication and anti-counterfeiting solutions, are contributing to its growth momentum.

Identity Solutions

Expected Growth: 2.8%

De La Rue's Identity Solutions segment growth of 2.8% is driven by increasing demand for secure identity documents, such as passports and ID cards, from governments and financial institutions. Additionally, the segment benefits from the rising need for anti-counterfeiting and authentication solutions, as well as the growing adoption of digital identity verification technologies.

7. Detailed Products

Currency

De La Rue plc provides a range of currency products and services, including banknote design, production, and security features.

Identity and Security Products

De La Rue plc offers a range of identity and security products, including passports, ID cards, and e-passports.

Cash Processing Solutions

De La Rue plc provides cash processing solutions, including cash sorting, counting, and authentication machines.

Security Paper

De La Rue plc manufactures security paper for banknotes, passports, and other secure documents.

Consultancy Services

De La Rue plc offers consultancy services to central banks, governments, and financial institutions on currency management, security, and risk management.

8. De La Rue plc's Porter Forces

Forces Ranking

Threat Of Substitutes

De La Rue plc operates in a niche market with high barriers to entry, reducing the threat of substitutes. However, the increasing adoption of digital payments and mobile wallets poses a moderate threat to the company's traditional paper-based products.

Bargaining Power Of Customers

De La Rue plc's customers, primarily governments and central banks, have limited bargaining power due to the company's dominant market position and high switching costs.

Bargaining Power Of Suppliers

De La Rue plc relies on a diverse supplier base, reducing the bargaining power of individual suppliers. However, the company's dependence on a few critical suppliers for raw materials and components poses a moderate risk.

Threat Of New Entrants

The high barriers to entry in the security printing and currency manufacturing industry, including significant capital investments and regulatory hurdles, reduce the threat of new entrants.

Intensity Of Rivalry

The security printing and currency manufacturing industry is highly competitive, with a few established players competing for a limited number of contracts. De La Rue plc faces intense rivalry from competitors such as Giesecke+Devrient and Oberthur Fiduciaire.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	86.41%
Debt Cost	4.56%
Equity Weight	13.59%
Equity Cost	11.39%
WACC	5.49%
Leverage	635.60%

11. Quality Control: De La Rue plc passed 1 out of 9 key points

Strong Liquidity

Low Debt

Strong Interest Coverage

Healthy Cash Flow

Operating Inefficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Coor

A-Score: 5.3/10

Value: 5.0

Growth: 4.0

Quality: 3.2

Yield: 8.1

Momentum: 6.5

Volatility: 5.0

1-Year Total Return ->

De La Rue

A-Score: 4.9/10

Value: 8.3

Growth: 2.2

Quality: 3.7

Yield: 0.0

Momentum: 9.0

Volatility: 6.0

1-Year Total Return ->

RWS

A-Score: 4.9/10

Value: 9.1

Growth: 5.0

Quality: 5.9

Yield: 8.1

Momentum: 0.0

Volatility: 1.0

1-Year Total Return ->

Green Landscaping

A-Score: 4.4/10

Value: 7.3

Growth: 9.1

Quality: 5.7

Yield: 0.0

Momentum: 0.5

Volatility: 4.0

1-Year Total Return ->

Franchise Brands

A-Score: 4.2/10

Value: 5.5

Growth: 6.6

Quality: 5.9

Yield: 2.5

Momentum: 1.5

Volatility: 3.3

1-Year Total Return ->

Caverion

A-Score: 4.1/10

Value: 4.6

Growth: 4.9

Quality: 5.0

Yield: 2.5

Momentum: 4.0

Volatility: 3.3

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

43.75%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

5.49%

De La Rue plc - GB00B3DGH821

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on DLAR

1.c. Company Highlights

Lower Growth

Strong Momentum

Lower Quality

Revenues Miss

Lower Yield

Cheaper

More Volatile

2. Transcript Summary

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (2.77%)

6. Segments

Currency

Expected Growth: 2.5%

Authentication

Expected Growth: 3.5%

Identity Solutions

Expected Growth: 2.8%

7. Detailed Products

Currency

Identity and Security Products

Cash Processing Solutions

Security Paper

Consultancy Services

8. De La Rue plc's Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: De La Rue plc passed 1 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

1.3$

Current Price

1.3$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA