Great start to the year, and more in the pipeline

Pointer Telocation (PNTR) has reported solid Q1 figures backed by strong 25% subscriber growth and 7% growth in per subscriber revenues. Boosted by operating leverage this translated into wider service margins and a 43% increase in operating profit. In coming quarters, as individual fleet vehicles are equipped with PNTR’s telematics, subscriber revenues from the FEMSA and NYC taxicab contracts should start to boost group revenues. We see Q117 as a good start to the year and, with management discussing similar contracts with other companies and exploring new acquisitions, more good news is likely to follow in the coming quarters. We have increased our multiple based valuation by 26% to $13.6 (NIS48.9) per share, while maintaining our DCF valuation at $14.9 (NIS53.6) per share.