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Medallion Financial Corp. (TAXI) Message Board

  • mountaingate170 mountaingate170 Jun 10, 2013 12:43 PM Flag

    Court approved new law expanding hailing vehicles in NYC

    The final court decision approving NYC's authorization of new hailing vehicles in the outer boros and uptown Manhattan may impact Medallion's business. The authorization of additional taxi medallions will also impact business. The question is how? The price of a medallion may drop meaning smaller loans. However, additional medallions may mean more loans. Additionally, since the new hailing vehicles require permits from the City and meters and other specifications, will this mean a whole new market for loans where Medallion will benefit? Hmmm....

    Sentiment: Buy

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    • More loans with rising interest rates? Sounds like a formula for more revenue.

      Sentiment: Buy

    • From Sandler, O'Niell and Partners, June 6th:

      "....State Court of Appeals decision allows New York City to proceed with
      medallion auction. The New York State Court of Appeals has ruled in favor of
      New York City to allow the HAIL Act to proceed. Among other things, the HAIL
      Act provisions for the city to auction off 2,000 new taxicab medallions. These
      medallions are restricted to handicap accessible vehicles. With an estimated
      market price today of about $800,000 per medallion, this equates to over $1.5
      billion of new medallions to lend upon.

      The windfall that TAXI has been waiting for. The medallion auction is a
      positive event for TAXI, mainly because 2,000 new medallions could easily turn
      into $200 million plus of new loans for the company, its bread and butter product,
      over a 2-3 year period. This assumes that the company maintains market share
      and represents 30% medallion loan growth, not including regular loan growth,
      over the next three years. Also, historically the price of medallions has risen on
      every medallion sale in NYC history. The reason for this is that fleets need to
      increase their medallions in order to recognize synergies; there could be up to
      5 bids per medallion auctioned off. The auction process will likely take place
      over a three year period as to not flood the market with new medallions, and
      could begin as soon as 4Q13. Depending on the timing and the success that the
      company has during the first year of auctions, it is possible that the company
      could want some additional capital to be able to fully take advantage.

      E-hail apps officially legal in NYC. Separately, this morning the temporary
      restraining order against e-hail apps in NYC was lifted (which allow somebody
      to hail a taxi from their smart phone). Although not quantifiable at this time, the
      ability to hail a taxi on your phone is an incremental positive for the industry and
      thus an incremental positive for TAXI....."

      RATING: BUY
      12-Month Price Target: $16.00

      Expect another SPO....

      Sentiment: Strong Buy

      • 1 Reply to bohleyman
      • Thanks for the input. I have the same reasoning as you. I also believe that Medallion remains in a good position even as interest rates rise somewhere down the road because of its increasing use of funds from deposits at Medallion Bank. I do have continuing concern about the new legal hailing permits infringing on the taxi business as plenty of taxi fares were made in the outer boros in spite of the past illegal pickups. Will the new legal status mean the permits must charge the same metered fare as taxis...or will their prices undercut taxi fares? No longer live in NYC so not up on it. But...with all those noticeable names on the Board, I hope the Company can work with most situations that NYC can produce.

        A final note...wish Medallion provided more information about its "other" business such as soccer teams, car racing, advertising on taxis and other medallion markets where it operates.

        Sentiment: Buy

 
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