ME Group International PLC  

ME Group International PLC (LSE: MEGP) is an FTSE 250 Index-listed UK-based entity, which is engaged in the operation, sale, and servicing of a range of instant-service equipment. The Company operates coin-operated automatic photobooths for identification and fun purposes, and a diverse range of vending equipment, including digital photo kiosks, laundry machines, business service equipment, and amusement machines. This Report covers the Investment Highlights, Conclusion, and Recommendation on the stock.

Key Recommendation Rationale – Sell at GBX 230.00

• Resistance near Current levels: MEGP’s stock price touched Resistance (R2) which was stated in the previous report on 30 April 2025 therefore, there can be a possibility of a decline in resistance levels. Considering the market conditions and the price action, it is prudent to exit the stock.
• Response to media speculation: ME Group has confirmed it is evaluating strategic options to enhance shareholder value, including exploring potential offerors, though no formal proposals have been received. The company emphasized there is no certainty that any offer will be made or on what terms.
• Decline in Cash and Cash Equivalents: Despite being highly cash-generative, cash and cash equivalents fell to £86.1mn in 2024 from £111.1mn in 2023, a decrease of 22.5%. This was mainly due to high capital expenditure (£54.6mn) and financing outflows (£34.7mn), which outpaced operating inflows.
• Decline in Other Vending Revenue and Profitability: Revenue from Other Vending fell to £9.8mn, down from £10.6mn in 2023, while EBITDA declined to £11.2mn (2023: £12.6mn), reflecting a drop in sales of vending machines and the exit from SEMPA. These trends suggest subdued performance in ancillary segments despite group-wide growth.
• Macroeconomic Risk: The market sentiments can remain weak in the short term due to the subdued consumer disposable income, geopolitical tensions, and political risks.

Valuation Methodology: Price/ Earnings Approach

Share Price Chart  

Conclusion

MEGP may continue to face valuation pressure due to ongoing challenges from FY24, including a £25.0mn decline in cash and cash equivalents, subdued performance in the photobooth segment, a higher effective tax rate impacting net profit, and reduced contribution from Other Vending, where revenue fell to £9.8mn and EBITDA dropped to £11.2mn (2023: £12.6mn). Additionally, while ME Group is reviewing strategic options to enhance shareholder value—such as exploring potential offerors—no formal proposals have been received to date. For conducting the valuation, the following peers have been considered: Games Workshop Group PLC (LSE: GAW), Stelrad Group PLC (LSE: SRAD), etc.

Given its current trading levels, the recent financial performance, strategic investments and partnerships, market expansion and cost optimization strategies, relative valuation, and associated risks, it is prudent to exit the stock at the current levels. Hence, a ‘Sell’ recommendation is given on the stock at the Current Market Price of GBX 230.00 as of 19 June 2025, 08:01 AM, GMT+1.

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is 19 June 2025. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Target Price refers to a price level which the stock is expected to reach as per the relative valuation method and/or technical analysis taking into consideration both short-term and long-term scenario.

Note 5: ‘Kalkine reports are prepared based on the stock prices captured either from the London Stock Exchange (LSE) and or REFINITIV. Typically, both sources (LSE and or REFINITIV) may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.’

Note 6: Dividend Yield may vary as per the stock price movement.