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.
Friday, 27 October 2017
Special report - OptiBiotix
Good evening all. It's a brief but important update re: OptiBiotix.
I have written about this company before and in July I said this:-
http://michae1mouse.blogspot.co.uk/2017/07/shares-to-avoid-at-all-costs.html
Before we get to OptiBiotix, it's worth having a look at the share prices of CPT, BST and NIPT since I wrote the article. Not a pretty sight is it?
As for R4e, did it breach it's banking covenants again? No it didn't I hear you all cry. Oh yes it did I'm afraid, although you may have missed it. The company issued the RNS at 6pm on 18th of this month. That's right 18:00. Anyway here it is just in case you missed it:-
http://www.londonstockexchange.com/exchange/news/market-news/market-news-detail/R4E/13401457.html
"the Directors of the Company understand that PNC remains fully supportive of r4e."
Perhaps they should know for sure?
Anyway, let's move on to OptiBiotix. In July I said this:-
"So are things on the up for OptiBiotix? Well given that the interim period ended in May and they've since had an AGM then surely investors have been given a guide to revenues, cash on the balance sheet, cash outflow, future projections etc.
No they haven't. Why might that be do you think? I'll leave it to your imagination.
Did anyone shout pathetic revenues and cash-call AHOY captain? I couldn't possibly comment."
Well I was certainly correct about the pathetic revenues at the half year. In fact worse than even I imagined. Total revenues amounted to £72,000. No, it's not a joke. It's less than they reported last year and significantly less than the previous 6 months , and neither of these were anything to shout about. Think about that. £72,000 revenues (not profits) and a market cap. touching £57m.
OptiBiotix's full year is the end of November. We're going to see a significant jump in revenues then? Nope, don't think so. What about 2018 then? I wouldn't bet your house on it. In fact I wouldn't bet anything to be honest. Have a listen to this guy and see how careful he is when talking about revenues. In fact I burst out laughing at one point near the end of the interview. See what you think:-
http://www.proactiveinvestors.co.uk/companies/stocktube/8299/optibiotix-health-focused-on-marketing-and-ramping-up-revenues-8299.html
Anyway, on to the main business. I was wrong about the cash call then? Nope. In my opinion it's coming.
Look at the latest set of interims. They are burning through cash at a rate of around £1m every six months. At end of November they will be down to their last million or less. In other words, six months left before they run out of cash. I presume they aren't going to let that happen. They won't be cash generative for some years yet (if at all of course). That means a cash call is relatively imminent.
They've already ramped up the spin, and it can't be to long before the begging bowl is out.
What price will the placing be? Difficult to say, but I'd guess a pretty hefty discount given the current market cap. relative to revenues (let's not even mention profits or FCF that would just be silly).
Anyway, good luck but I'm not a fan of these companies as you've probably gathered, although I should say that this blog is my own thoughts and opinions and I'm always prepared to stick my hand up if I get it wrong.
I have written about this company before and in July I said this:-
http://michae1mouse.blogspot.co.uk/2017/07/shares-to-avoid-at-all-costs.html
Before we get to OptiBiotix, it's worth having a look at the share prices of CPT, BST and NIPT since I wrote the article. Not a pretty sight is it?
As for R4e, did it breach it's banking covenants again? No it didn't I hear you all cry. Oh yes it did I'm afraid, although you may have missed it. The company issued the RNS at 6pm on 18th of this month. That's right 18:00. Anyway here it is just in case you missed it:-
http://www.londonstockexchange.com/exchange/news/market-news/market-news-detail/R4E/13401457.html
"the Directors of the Company understand that PNC remains fully supportive of r4e."
Perhaps they should know for sure?
Anyway, let's move on to OptiBiotix. In July I said this:-
"So are things on the up for OptiBiotix? Well given that the interim period ended in May and they've since had an AGM then surely investors have been given a guide to revenues, cash on the balance sheet, cash outflow, future projections etc.
No they haven't. Why might that be do you think? I'll leave it to your imagination.
Did anyone shout pathetic revenues and cash-call AHOY captain? I couldn't possibly comment."
Well I was certainly correct about the pathetic revenues at the half year. In fact worse than even I imagined. Total revenues amounted to £72,000. No, it's not a joke. It's less than they reported last year and significantly less than the previous 6 months , and neither of these were anything to shout about. Think about that. £72,000 revenues (not profits) and a market cap. touching £57m.
OptiBiotix's full year is the end of November. We're going to see a significant jump in revenues then? Nope, don't think so. What about 2018 then? I wouldn't bet your house on it. In fact I wouldn't bet anything to be honest. Have a listen to this guy and see how careful he is when talking about revenues. In fact I burst out laughing at one point near the end of the interview. See what you think:-
http://www.proactiveinvestors.co.uk/companies/stocktube/8299/optibiotix-health-focused-on-marketing-and-ramping-up-revenues-8299.html
Anyway, on to the main business. I was wrong about the cash call then? Nope. In my opinion it's coming.
Look at the latest set of interims. They are burning through cash at a rate of around £1m every six months. At end of November they will be down to their last million or less. In other words, six months left before they run out of cash. I presume they aren't going to let that happen. They won't be cash generative for some years yet (if at all of course). That means a cash call is relatively imminent.
They've already ramped up the spin, and it can't be to long before the begging bowl is out.
What price will the placing be? Difficult to say, but I'd guess a pretty hefty discount given the current market cap. relative to revenues (let's not even mention profits or FCF that would just be silly).
Anyway, good luck but I'm not a fan of these companies as you've probably gathered, although I should say that this blog is my own thoughts and opinions and I'm always prepared to stick my hand up if I get it wrong.
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