News

02-12-2004 - Printing.com - Full-colour prospects for Printing.Com - Shares Magazine

Printing.Com's (PDC:AIM) decision to move from OFEX to AIM

has resulted in greater interest in the shares. They were

launched on AIM at 30p in August and have outperformed the

market by 26% over the past month, and are now trading at 41p.

The company specialises in a low-cost full-colour printing through a

chain of 26 main stores, most of which are franchised, and 61 bolt-on

franchisees. The company has a centralised printing press in

Manchester which enables it to quote competitive prices; for example,

it can print 10,000 full-colour leaflets for GBP155 compared with the GBP386

charged by some rivals. Around 500 full-colour business cards would

cost GBP49 compared with GBP169 from others. These comparisons become

less favourable if the customer wants only 2 colours but Printing.com is

still substantially cheaper.

The printing market is in total worth ove GBP2 billion. However that

includes some longer runs. The market for small and medium-sized

runs is worth some GBP1 billion, which underlines the potential for the

group.

Currently the group has 16 main franchisees but expects the

company's growth to centre on an expansion of the network. The

original Leicester franchisee had also become the area franchisee for

Leicestershire. He has already found bolt-on franchisees in Market

Harborough, Barrow upon Soar and Leicester itself. His eventual aim is

to have six or seven bolt-on franchisees, which will have allied

businesses and be computer literate.

The main franchisees are incentivised to recruit bolt-on franchisees.

Eventually the group believes there is potential for 66 territory

franchisees and over 300 outlets with each franchisee controlling some

four other outlets.

Although there will always be some company-owned stores the

group believes it will get better returns through the franchise route

which incentivises the individual entrepreneur.

There are some 2,500 on-demand printers in the UK. The market is

dominated by Kall Kwik and Prontaprint, which have a combined share

of 13%. No one else has more than 1% of the market. This underlines the

potential for Printing.com to expand.

Next year capacity constraints will force it to increase its printing

capacity. It is likely to increase the capacity of the existing Manchester

printworks. Thereafter it is likely to open a printing works in the South.

Brokers are optimistic about the future. Brewin Dolphin is

forecasting 2004/05 earnings of 2.5p rising to 4.4p next year.