Is it worth investing in mobico as shares hit record low ?

Phil White, one of the pivotal figures behind the rise of National Express, has made a return to the company, now rebranded as Mobico. At the age of 75, White steps back in as executive chairman during a period of substantial financial and structural challenges, including the company’s all-time low share price, mounting debt, and uncertain direction.

Recent strategic moves have included the sale of Mobico’s US yellow bus business. Although this disposal has allowed the company to refocus its portfolio, it came at the heavy cost of a £550 million accounting loss. This departure from the US market follows years of slim operating margins and rising costs. What remains to be seen is whether this sale marks the beginning of a more streamlined future or the precursor to more drastic measures, including a potential break-up of the group.

In the UK, Mobico faces continued hurdles. Competition in the West Midlands bus market has intensified, while its National Express coach operations are under pressure from decarbonisation requirements and a reduction in demand for rail replacement services, which had previously been a reliable revenue stream. Meanwhile, the company’s German rail business has struggled with inefficiencies in a disjointed system, exacerbating the perception that this international operation is more of a liability than an asset.

Despite these challenges, Mobico retains one significant bright spot in its portfolio. The Alsa business, spanning Spain and North Africa, achieved £186 million in profits last year. This makes Alsa the standout performer within the group. Remarkably, Alsa’s profitability is offset against Mobico’s current equity valuation of under £175 million, raising questions about the future direction of the company and whether its low valuation creates an opportunity for investors. The Cosmen family, founders of Alsa and still holding a 24 per cent stake, remain key stakeholders and could play a central role in any major strategic shifts.

Debt remains another critical issue for Mobico, with net liabilities totalling nearly £1 billion prior to the sale of its US operations. The pressure to significantly reduce this burden is likely to drive decision-making in the months ahead. Some analysts believe that the company is heading towards a full-scale break-up, which might potentially unlock more value for shareholders.

For those willing to embrace the risks, Mobico’s undervalued stock and strong performance from its Alsa division could present a worthwhile opportunity. Much now relies on White’s leadership and his ability to implement a clear vision for the company, whether through stabilisation or structural transformation. While investing in the group’s shares involves significant risk, the current valuation may tempt those looking for long-term gains.