M E T RO F I L E Small-cap winner

Document storage is far from being a glamour sector. But it is a sector in which market leader Metrofile has thrived, delivering average headline EPS growth of 26%/year over the past five years.

Summing up Metrofile’s investment merits, First Avenue Investment Management analyst Nadim Mohamed says: “It is the type of share a long-term investor should own.”

In an era of digitalisation paper documents remain very much a part of the scene. “We do digital storage but paper document storage is still cheaper than digital if regular access is not needed,” says Metrofile CE Graham Wackrill.

Volumes continue to grow apace, boosted by regulations such as the Consumer Protection Act which have spawned unprecedented document volumes. “We have more than 8m boxes with a net 600 000 (7,5%) being added annually,” says Wackrill.

Storage is in 26 warehouses in 21 locations nationwide. Covering a total of 83 800 m 68% of the warehouses are owned by Metrofile, says Wackrill. Client numbers are also growing, rising from 8 000 in 2012 to 9 000 including all five big banks.

Since its founding 32 years ago Metrofile has built a dominant 65% share of a market in which it faces only two competitors of notable size: Document Warehouse and Docufile. Barriers to entry are also high. “There are a lot of small players but once they get above 50 000 boxes they run into infrastructure problems,” says Wackrill.

However, market dominance restricts growth. “We realised that growth potential from storage alone in SA has become limited,” says Wackrill.

Diversification has led to Metrofile entering fields such as destruction of confidential docoptimistic