Mainfreight Limited (NZE: MFT) is a logistics and transport company headquartered and operating in New Zealand but with operations also in Australia, Europe, Asia and America.
Mainfreight prides itself on service and quality, differentiators that are universally appreciated and valued.
Significant to note is the strength of their management team who have proven themselves to be responsible, consistent and personally invested in the success of the company.
The company was founded by Bruce Plested, who remains on the board, in 1978. The CEO, Don Braid has been with the company for 22 years. Both are large shareholders and have demonstrated consistent growth over the long term, with a strong focus on service culture.
Leading Market Share
The company sits within a competitive industry which includes businesses like Toll Group and Linfox.
However, Mainfreight has been able to establish a market share of over 50% in New Zealand and we believe if they employ the same skills and management to their operations internationally they have the potential for strong growth in much larger markets. We estimate Mainfreight’s market share in Australia at around 5%, and much lower in the US.
Over the past ten years, Mainfreight has shown a compound average EPS growth of 11%. The business requires moderate capital to grow (warehouses and branches), and has shown a return on capital employed of 19%.
Why We Invested In Mainfreight Shares
We have chosen to invest in Mainfreight for the following reasons:
- Strong, consistent, aligned management team.
- Consistent track record of earnings growth.
- The opportunity to boost market share internationally well into the medium term.
- The company has medium capital intensity, allowing them to grow without investing too heavily.
Disclaimer: Any information contained in this article is limited to general financial/investment advice only. The information has not taken into account your specific needs, goals or objectives, so please consider consulting a licenced and trusted adviser before acting on the information. Please read The Rask Group’s Financial Services Guide (FSG) for more information. This article is authorised by Owen Raszkiewicz of The Rask Group, which is a corporate authorised representative No. 1264179 of Strawman Pty Ltd (ACN: 610 908 211) (AFSL: 501 223).