Trakm8 interims

Trakm8 released their interims this morning and the share price has currently taken a 30% hit. I'm not sure what investors were expecting, but in my view, it's the usual wild over-reaction by myopic investors looking for short term gains. Trakm8 has a fantastic opportunity to exploit in the telematics industry, and has clearly gone for that opportunity in a big way with a very large spend on engineering capacity, alongside sales and marketing resource. We'll be able to judge in the medium to long term. In the short term, although revenues continue to grow, profitability will suffer a little. I'm happy with that. As I said in a recent blog :-

http://michae1mouse.blogspot.co.uk/2016/11/still-on-trak-week-on-monday.html

"My view is that with a long term view, the company is hugely undervalued. I'm not particularly bothered whether or not they hit expectations this year, as long as they keep growing that order book."

I'm not going to do a forensic analysis of the results:-

http://www.londonstockexchange.com/exchange/prices-and-markets/stocks/summary/company-summary/GB00B0P1RP10GBGBXAIMI.html

but as usual you should DYOR.

It's also worthwhile taking a look at the short video presentation by John Watkins:-

hTTp://www.piworld.co.uk/videos/2016/11/28/trakm8-trak-h1-results-presentation-september-2016

For me, the clear risk going forward is can they turn the increased engineering, sales and marketing spend into the proportionate eventual increases in revenues and profitability, and will their expansion into China and the US bear fruit?

However, in my previous blog I wrote this:-

"With a medium/long view on Trakm8, I'm looking for £10-£20. In the short term, at the current lowly valuation, they are possibly vulnerable to a bid at around £5. "

Personally, I think they'd have been remiss not to go for the opportunity in the telematics arena with their market leading solutions, and I see no reason to change the targets stated above, as things stand at the moment.

I am in the advantageous position in that I bought my holding in Trakm8 when the SP was in the teens, and I accept that some investors may have bought recently and are sitting on paper losses.

I bought my shares in 2011, and if I'd closed down my computer and not come back until now then I'd be very pleased with progress. Bully for me eh!!

Something to think about if you're currently sitting on paper losses. If you'd bought Avesco shares in 2007 then you'd have paid just over a £1 and then watched as they fell to around 20p. Not nice. However, assuming that you didn't sell then even if you didn't pick any more up from that time onwards you'd now have got yourself a 6.5 bagger, a £1.10 special dividend, and all their interim and final dividends.

I offer no advice with Trakm8, but I'm happy to stick around. If all else fails, think about their blue-chip clients and installed devices (recurring revenues) and think what a larger player might pay to enter this growing and lucrative market.