InPost (INPST.AS) - Undervalued Delivery Disruptor
How a Small Polish Business Revolutionized Last-Mile Shipping
Summary:
InPost presents a unique European equity story characterized by high growth, strong cash flow, and a wide moat. The company has developed a logistics system that is difficult to replicate, offering delivery times that are approximately 20-50% shorter at ~30-40% lower price points, outpacing Amazon, UPS, FedEx, and DHL.
InPost provides typical Door-to-Door (D2D) and Out-Of-Home (OOH) delivery services. It operates a network of ~44k parcel lockers (APMs) and ~35k pickup points (PUDOs) throughout Western and Central Europe. It has ~19m APM users throughout the continent.
The European delivery market differs significantly from that of the United States. Packages are not left on doorsteps due to cultural differences and theft concerns, and there are no package rooms in apartment buildings. Additionally, population centers in Europe are denser and more pedestrian-friendly, making it a favorable environment for Out-of-Home (OOH) delivery services. These also allow couriers to achieve higher efficiency by dropping off multiple packages in a single location.
Currently, InPost has ~ 56% and ~3% share of the total number of Polish APMs and PUDOs, respectively. In Western Europe, where it is less established, it owns ~20% of the OOH market and ~10% of the total delivery market.
The parcel lockers provide a first-mover advantage, particularly in tourist-oriented cities with strict urban planning, which are increasingly reluctant to have multiple lockers located nearby. We believe that InPost, as the largest and fastest-growing player in this sector, will build a strong and sustainable moat through its APM network. Furthermore, there is potential for additional cash flow through APM sharing.
The company has demonstrated its ability to replicate its success in Poland and internationally, growing both organically and through acquisitions (such as Menzies and Mondial Relay).
In 2024 we project that InPost will grow its Out-of-Home Points (OHPs) by 17% and 55%YoY in Mondial Relay (France, Iberia, and Benelux) and Other International segments (UK and Italy), respectively.
At the same time, InPost is enhancing its international delivery network by constructing new logistical centers and is rapidly improving its margins (2024E 21pp and a 3pp margin expansion in the Other International and Mondial Relay segments, respectively).
Now, let’s discuss how attractively valued is InPost.