Wilson Asset Management very bullish on SNL: Camilla Cox: Sam,...

Wilson Asset Management very bullish on SNL:

Camilla Cox: Sam, Supply Network (ASX: SNL), they’re basically keeping trucks on the road. Why do you like them?

Sam Koch: That’s a great summary. Supply Network is an aftermarket provider of parts and services to the commercial vehicle market. As you said, they literally just keep trucks on the road. We really like them. So this was founded and owned by Chairman Harry Forsythe back in the late 1980s. And it’s just been this beautiful compounder where they’re actually generating the highest organic growth in the market. the best margins and the best return profile versus all the other peers.

Now what’s their edge? They deeply understand the customer. This customer isn’t necessarily price sensitive, they don’t want to nickel and dime on a penny here and there. They care about making sure that the truck is still on the road delivering the essential services for Coles and Woolworths and the like day in day out.

In order to do that they understand that delivering best service and the best availability of stock is key. We believe this undervalued and under research company is similar to like the strong compounders in the US like O ‘Reilly and also ARB here listed domestically. Those companies trade on 25 to 30 times earnings. We believe that a similar multiple can be attained for Supply Networks over time and the catalyst is continued execution and earnings upgrades.

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