Since I continue to hold TNT, we are in broad agreement. Your...

Since I continue to hold TNT, we are in broad agreement. Your analysis is based on great research. However, the low price/revenue tells us little in itself and comparing it against other companies in the sector can be misleading.

Valuation is ultimately driven by future earnings. There's a lot going for TNT here. Many believe the potential market is large and TNT can control operating costs as it grows. So why is the market valuation low? Risk is a big input.

Firstly, can management generate adequate revenue growth? The jury is out on this one. The CEO has loads of experience running small businesses, but no track record in making the transition to the next level. Of course many successful CEOs have once been in this position, and I think Mr Glennan can succeed. But it is not a sure thing.

Secondly, can TNT retain customers as competition heats up in their sector? Can they hold their own if a well funded foreign company enters the market? This is strongly linked to innovation and intellectual property. TNT looks weak here. There are no patents and there is insufficient stickiness the service offering. This leaves them exposed to a disruptive, cheaper technology. Many will argue that a cheaper alternative will be of less quality. History shows that does not matter in a disruptive scenario.

Thirdly, can TNT extract more revenue from existing customers over time? This is also linked to innovation. It would be good to see a strategy of developing complementing and/or adjacent offerings.

Fourthly, can TNT raise capital as required? Can they weather a major recession? Can they survive a price war? Right now perhaps not, and in any case it would be extremely painful for existing members.

I don't hold FZO because I don't like the upside, but they are currently performing much better against some of the factors identified. This might go some way to explaining the respective market valuations. Conversely, TNT may lift it's valuation by moving the needle on one or more of these issues.