What The Company Does:
Trakm8 is a major provider of Telematics Solutions to a variety of customers that operate within three discrete business sectors to cater for all telematics requirements. By providing innovative solutions to suit different customer needs, Trakm8 are at the cutting edge of telematics design.
Telematics hardware for Distributors, Integrators and ASP’s
Trakm8 have market leading hardware devices that can be integrated into 3rd party telematics or Internet of Things (loT) solutions. These devices can be split into four product lines:
Trakm8 are market leaders in safety black box camera recording systems utilising the smallest and most rugged 1080p cameras on the market today.
Cameras are being increasingly used in a wide range of applications, including a significant demand for forward facing vehicle cameras to record driving incidents and to mitigate the risk from ‘crash for cash’ accidents. Video data is increasingly used to monitor behaviour and to replay outcomes. The increase in the richness of the data generated by our telematics solutions will continue to provide the very best solutions within the telematics industry, making Trakm8 the number one choice.
Trakm8 undertakes a wide range of customer specific development projects to assist the integration of telematics and all derived data into a customer’s management system. No job is considered too large or too small, and Trakm8 have a multi-disciplinary engineering team which is equipped to address most challenges
Outlook half Year Report 23/11/2015
The Group believes that we will continue to successfully execute our outlined strategy and as a consequence deliver growth in shareholder value. The second halves of our financial years have consistently shown increasing revenues including service revenues over the first half. This year we expect that this will be true again. This, along with a full period effect of DCS, means that we expect second half of the year revenues will be considerably ahead of the first six months.
At the time of our Final Results in July we indicated that we expected to modestly exceed the market's then current expectations. The Board is now confident that the results for the year ending 31st March 2016 will again modestly exceed the market's current expectations.
Proposed acquisition of Route Monkey Holdings Limited and £6 million placing 21/12/15
Adds fleet routing optimisation capability
The Acquisition will be funded through a combination of a drawdown of new Trakm8 debt facilities, a placing of 1,801,802 new ordinary shares of one pence each in the Company ("Ordinary Shares") ("Placing Shares") at a price of 333 pence per Placing Share (the "Issue Price") to raise £6 million (the "Placing") and 184,441 new Ordinary Shares being issued as part of the consideration to the senior management shareholders of Route Monkey ("Consideration Shares").
The Placing with new and existing institutional investors, conducted by finnCap, was oversubscribed. The Placing adds new blue-chip institutions to the share register. The Acquisition is expected to complete ("Completion") on admission of the Placing Shares to trading on AIM ("Admission").
The Acquisition is in line with Trakm8's strategy of augmenting its organic growth with selective acquisitions that expand its telematics offering to both insurance and fleet customers. The Acquisition is expected to be immediately earnings enhancing.
Est date of next trading update or results announcement: Probably April 2016 if same as 2015
Broker View @ Time Of Purchase
Why I Like The Business:
The business first seriously came to my attention following the half-year results in November 2015 and then after the oversubscribed placing for the Route Monkey acquisition in December 2015. The placing was at 333p and at the time I was caught in two minds i.e. expensive but excellent growth prospects V full take up at 333p by institutions. Luckily the share price fall caused by the so called bear-raid and the general market fall made me decide to put on hold any investment.
The “grey areas” of concern have to my mind been very well laid to rest by the excellent interview with John Watkins, Exec Chairman by Paul Scott in the last couple of days.
I should add that I was very fortunate, or should I say may have been very fortunate, to buy at close to a low today. Of course I may have bought early but I will have to wait and see.
Turnover & Profit trend are very impressive and hence the mid-December highly rating of the shares.
Whittling About the Numbers
PE(f): this stood at about 24 in mid-December but has now fallen a PE(f) of 14 as the share price has drifted back on the recent accounting concerns
cps/eps; I am comfortable with cps being higher than eps; something I look for when making a purchase.
Yield: no dividends are paid as yet as the company reinvests funds to grow the business at this stage.
FCF cover of dividend: although no dividend is paid and funds are reinvested, the FCF over recent years suggests that when the growth phase slows down there should be cash available to pay dividends; maybe something for the future.
Debt: does not appear to be an issue.
Pension Deficit: none
Current ratio: 1.5
Piotroski: 6 Stockopedia and 5 on SharePad
Risks: as ever some competition risk plus possibly some selling by institutions who may want to offload shares bought at the placing price of 333p as the SP increases.
Initial price target/Review: I have set this at 260p
Stop Loss: I will set this at 170p due to risk around current market sentiment; a bit more generous on the low side than usual.
It’s not a massive position but one I may add to if the overall market conditions don’t deteriorate overly in the coming months and of course if RNS announcements remain positive.
Welcome to my Blog Page - I hope you find my whittling on to be of some interest. I am a private investor who is happy to share thoughts on the market and individual stocks. Please remember that I am definitely not offering tips or investment advice.