Trakm8 released their interims this morning, and it appears that the company has now resumed it's growth trajectory.
You can crunch the numbers all you like and perform some sort of forensic analysis on the results, but I've always found that sticking to very simple measures works for me.
Simply put, the interims were a great improvement on last year. What do you need to know?
For me it's just these facts:-
1) They generated £3.6m cash, paid down £2m in bank loans and added £730,000 to the balance sheet in the latest 6 months. Cash on the balance sheet stands at £2.7m.
2) Adjusted profit was up 78% to £1.05m, and adjusted basic EPS up 125% at 3.56p.
3) Solution sales were up 29% with the all important recurring revenues up 17% (£5.5m). Forget the overall revenue figure (up 12%) because it's distorted by their move out of low margin product sales.
4) At the period end they had approximately 217,000 units (Sept 2016: 177,000 units) reporting to their servers, being an increase of 23% over the last twelve months. This is an increase of 27,000 units (14%) since 31 March 2017.
5) Gross margin is steady at a more than healthy 48%.
They anticipate a stronger second half (as usual) with the visibility to support their second half expectations.
Pretty straightforward to me.
The share price was up 0.5p today, but has risen strongly in recent weeks following their October trading update. There were no surprises in the interims.
All the basic measures look pretty impressive to me, and I am hopeful that the company will go from strength to strength. For a growth company at the cutting edge of an exciting space, I'd suggest the share price has far further to run in the short, medium and longer term, although ultimately I'd expect Trakm8 to be acquired for between 4 and 10 times revenues (based on other Telematics company acquisitions).
Monday 27 November 2017
Friday 10 November 2017
Update AEO - a no brainer now surely?
AEO have just released their year end results at 11:15 today (Friday). They often tend to do this which gives the impression that they are trying to bury bad news. However, this isn't the case. In fact I'm suddenly a little more excited about AEO.
It's the best set of results they've put out since I've been interested in this tiddler.
The market may be slow to wake up, but if AEO execute well going forward then this could be primed to get very exciting.
It's a clear change of strategy as they try and move more towards growth than income (although a small dividend is always welcome). Dividend reduced from 2p last year to 0.5p this year. Was this why the two founders left the company earlier this year since their substantial shareholdings provided sizeable dividends?
The £469,489 of cash they added to the balance sheet over the year could have been used to pay shareholders a 5p dividend (i.e. 20% return) if they had wished and still retain a healthy £1.4m on the balance sheet. Which brings me on.
If they can prove they can generate growth by retaining the cash then that will be very exciting going forward. If not then the business if a great cash generator and can go back to being a terrific dividend payer. A win win situation surely?
I'm tempted to say that at these prices AEO is a no-brainer, although the caveat would be that it's a very small company. It has no debt and the cash on the balance sheet is almost equivalent to the current market cap. (£2.2m)
In fact the market cap. is less than 5 times the FCF for the year. If you take the last 6 months in isolation then it's even more impressive where they have generated almost £750,000 of FCF.
I don't think I've seen a cheaper company valuation since Avesco, albeit AEO is much smaller. The results have exceeded my expectations and then some.
Interesting times ahead.
It's the best set of results they've put out since I've been interested in this tiddler.
The market may be slow to wake up, but if AEO execute well going forward then this could be primed to get very exciting.
It's a clear change of strategy as they try and move more towards growth than income (although a small dividend is always welcome). Dividend reduced from 2p last year to 0.5p this year. Was this why the two founders left the company earlier this year since their substantial shareholdings provided sizeable dividends?
The £469,489 of cash they added to the balance sheet over the year could have been used to pay shareholders a 5p dividend (i.e. 20% return) if they had wished and still retain a healthy £1.4m on the balance sheet. Which brings me on.
If they can prove they can generate growth by retaining the cash then that will be very exciting going forward. If not then the business if a great cash generator and can go back to being a terrific dividend payer. A win win situation surely?
I'm tempted to say that at these prices AEO is a no-brainer, although the caveat would be that it's a very small company. It has no debt and the cash on the balance sheet is almost equivalent to the current market cap. (£2.2m)
In fact the market cap. is less than 5 times the FCF for the year. If you take the last 6 months in isolation then it's even more impressive where they have generated almost £750,000 of FCF.
I don't think I've seen a cheaper company valuation since Avesco, albeit AEO is much smaller. The results have exceeded my expectations and then some.
Interesting times ahead.
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