Trakm8 - Driving growth into new territories

Last week Trakm8 released a trading statement ahead of their AGM. In the first four months of the year, strong organic growth has continued with the value of new orders booked up 33% against the same period last year on a like for like basis.

This year will also see a full contribution from Box, which they acquired towards the end of last year, and as a consequence, revenues will be considerably higher with the corresponding benefit to profitability.

Interestingly, the current year has seen 17,000 more units reporting to their servers making 75,000 in total. If they continue at that rate then over the full year the number of units reporting to their servers will have almost doubled. This is extremely encouraging since the revenues generated are recurring, and form the basis of Trakm8's financial stability as it moves through the gears on it's growth trajectory.

In recent weeks they have also announced new contract wins with Kubota (an existing client) and Downton (a new customer). On Friday they announced a further contract win with SAGAsystem AS based in Norway moving them into Scandinavia which represents a new territory for Trakm8. It's reassuring to see Trakm8 are not only able to win new clients and move into new territories, but importantly existing clients keep returning to expand and update with Trakm8 solutions and products.

Whilst Trakm8 has already been a multibagger for me, I see no reason to sell my holding and remain hopeful that they can continue to capitalise on their position in the rapidly growing Telematics market place. I am cautiously optimistic that with the market opportunity that lies before them, over time they can develop into a company that commands a market capitalisation well above the current valuation of £22m.

The company remains on track to meet market expectations for the full year of 5.7p EPS which puts the forward p/e at just over 13, the predicted EPS for 2016 at 8.0p gives a forward p/e of just 9.5.
Given the rate of growth, this suggests the shares are very good value, and any announcement of further major contracts similar to their recent win with Direct Line would make the shares look extremely cheap.