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Tracsis, a leading provider of software, hardware, data analytics/GIS and services for the rail, traffic data and wider transport industries, is pleased to announce it has been awarded new contracts for the supply of Remote Conditioning Monitoring ('RCM') Hardware and Software to a major North American transit agency.
This win represents a strategically important milestone for Tracsis, as North America is an important future growth market for our Rail Technology & Services division.
Max Cawthra is standing down as CFO after 10 years to be rplaced in February by Andy Kelly. See RNS of 28th Sept. and PI World presentation in this regard. Has been a key player in the success of this company.
Not a good signal for the confidence in the company when a CFO offloads shares ! "Tracsis is a leading provider of software, hardware and services for the rail, traffic data and wider transport industries, and confirms that on 14 December 2020, its Chief Financial Officer Max Cawthra sold 75,000 ordinary shares in Tracsis at a price of 638.7p."
I think if they just make a hint that they are starting to expand in the US, it will go beyond £10 within a few months. The software and the niche market are unique. Expanding in the US means exponential growth. So if one compares TRCS to a similar software such as KNOS (with market cap = almost 9 times etc.), I can see a great value on here thus why it is undervalued. With expansion - perhaps even in Europe - this can easily go to £15 - £20 in a just 1 - 2 years.
Improving economic conditions will trigger more activities thus more rail and road traffic - all requiring services from the likes of TRCS. This is with or without Brexit as this is mainly based in the UK with expansion plans in the US (with traffic 100 times more dense than in the UK) which will increase its growth by ten folds. I will hold the shares for at least for a few years. IMO, this is undervalued when compared to its peers in the software sector.
Some companies that have come through the Covid saga in a reasonable state and have maintained or improved cash resources have reinstated dividends. Looking at the Tracsis trading statement, and its cash balances I can't see any reason why they won't pay a dividend. Not that the Tracsis dividend is particularly material, but its a nice to have.
As has been discussed, the company will almost certainly be badly impacted by the restrictions placed on outdoor events as well as a major fall in rail passenger journeys. However, in its recent interims, it did state “We are in the final stages of negotiating several large multi-year software licencing contracts which we expect to close over the coming weeks”. This is in stark contrast to many UK listed companies where winning new business has simply stopped and where the focus has shifted to survival.
HI GE17
Same to you. Working from home. Missing the office, believe it or not!
I don't have great expectations for this year. But most investors are realistic, I believe.
The landscape is going to look 'interesting' once we get through this. I suspect we will see the UK influenced by released lockdowns by other countries, once we get to the peak of current infections etc. But people will be naturally subdued until there is widespread antibody testing, and know where we stand.
Best wishes
Hi Muzzletoff,
Hope you are keeping safe in these difficult times.
Not expecting much this financial year. Outdoor events and data collection team could suffer a £6-8m hit to revenues this financial year. Hope Tracsis can protect as many staff positions as possible. Interim/final dividends likely to be cancelled.
Tracsis will secure many renewals/new contracts but benefits will come through late this calendar year and beyond. RCM Team and Ontrac (Rail safety products) serve Network rail and so sheltered to some extent but they also rely on production facilities being maintained to complete contracts. Vivacity and Compass are bright spots for the future.
Very challenging 6 months ahead for everyone. Protecting health and jobs must come first.
Stay safe.
I hold Tracsis shares. Do your own research etc, etc
Hi GE17
Fascinating stuff. Thanks for the links.
Good to see the data is anonymous
Maybe people aren't as good in town centres at judging lateral distancing. Perhaps we will need a stripe down the middle of pedestrian walkways similar to roads :-)
Trains etc are in a bit of an interesting dynamic, with some of the franchises devolving to Govt. So could be a few bumps along the way, whilst Covid-19 and these new factors work their way through.
Hi Muzzletoff,
Interim results due tomorrow.
Missed those reports but here are some interesting links from the Vivacity Labs twitter page:
https://www.linkedin.com/pulse/social-distancing-data-from-oxford-peter-mildon/
https://vivacitylabs.com/talking-heads-highways-uk-using-ai-to-monitor-the-impact-of-covid-19-on-our-highways/
http://sut4.co.uk/l/c.php?c=40550&ct=426864
I hold Tracsis shares. Do your own research, etc, etc
I wonder if Tracsis traffic data analytics played any part in the Chief Science Officer reports on traffic flow etc made yesterday
Hi GE17
Yes, arguably unfortunate timing for the acquisition, which takes out something like 40%+ of the standing cash of Tracsis.
I always thought that getting 'good' deals was going to get expensive. In the background there are plenty of Private Equity deals going on at reasonable multiples for cash generative companies.
Clearly there is massive uncertainty at the moment, companies that can afford it probably will be keen to retain key staff through a downturn.
But for casual labour it is going to be more difficult.
Hefty, hefty price paid for IBlocks but it is high margin market leader with a highly strategic role in the UK rail industry. I hope they are working on proposals to produce cross TOC ticketing systems. I suspect a large wad of the extra £3.4 is cash in the net current assets. Timing?
3 weeks ago, I was not overly concerned about a hit (say £2-3m) to the outdoor market this summer as the rest of the group appear very busy. But it could get worst. I do sympathise with event day staff who will be hit hard by the loss of income. Revenues/profits could easily be flat or down for the year. The slowdown in normal business activity will impact service delivery to clients. Can software upgrades/contracts delivery be cosseted in this challenging environment?
Will TOCs or other clients defer contract announcements if their revenues are hit over the next 6-12 months? Work with network rail and TFL are less of issue as they have the funding. The CEO Interviews at the time of the interims will need to reassure investors about the short to medium term prospects. Longer term, the business prospects are healthy but this could be a challenging year.
I hold Tracsis. Do your own research, etc, etc.
Looks like the general downturn is hitting the Tracsis shareprice. Passenger numbers are declining sharply, and there are obviously concerns about big events. Obviously infrastructure planning goes beyond the next 2-3 months, so hopefully that is where some stimulus will put Tracsis in a good position.
But there may be a poor second half to deal with, and perhaps some issues arising from cash generation with regard to that.
Hopefully outflows will not be too onerous, but it looks like the recent acquisition may have just been caught out by the turn of events.
They are a cash positive business so hopefully that's enough to see them through the current situation. No one really needs an equity raise at the moment, if it can be avoided.
Hi GE17
An interesting acquisition today of iBlocks. Buying a supplier of backroom systems seems quite a smart move, and nicely cash generative and profitable too! However, it seems on first superficial review that they have had to go above their normal multiple to get it. I would like to think they can ramp up its revenues, and maybe as part of a Group of companies, it high net margins will not be so visible (always a temptation for competitors, and procurement people to erode)
I think having a system that deals with repaying commuters delayed ticket rebates, but that feeds that into accounting systems and marketing systems is smarter than just having a rebate platform. That strikes me as having more of a usp and may add to its credibility as a one stop shop for tenders etc.
I think we are going to take a hit from Covid-19, but the scale of it is yet to be seen.
Rail Infrastructure investment is high on the list for this Govt. so would like to think that we will see 2-4 years of good upside for Tracsis if they can secure some of these revenues.
All the best
Hi Muzzletoff,
Apologies for the delay.
Re trading update & Covid; plenty of food for thought.
Is this the new CEO tweaking historically conservative statements? Very up upbeat statement boarding on the bullish. 3 weeks early, why? A 30% increase in interim revenues “was in line with expectations?" Gulp.
Will the house broker upgrade the forecast for the year? Covid could force them to hold fire. No acquisitions to date could reflect confidence in meeting this year’s targets.
Strong hints about acquisitions in the Rail technology services. Companies serving Network rail would be highly complementary have strong long term prospects. NR is at the start of a funding cycle and is coming under increasing pressure to improve infrastructure performance.
A little early to say but Covid could affect the outdoor event market. Government spin their position on a six pence. Marquee events like the Cheltenham festival, Glastonbury and Silverstone could be at risk. Tracsis serve a large number of farming/country shows, music festivals and weekly race meetings up and down the country. This year, strong revenue growth across the group could cope with a hit to revenues in the outdoor team.
Last year the focus was software development/upgrade(acquisition of Bellvedi), this year it’s project implementation. The strong hint about tenders points to potential contract wins. Tracsis have been recruiting project managers. The recent highs over £8.20 may reduce downside. Don’t forget, the share price was £7.00 at Christmas.
Vivacity Labs are gaining traction with contracts for Highways England, TFL, and received Government funding for programmes across the country.
Interims due the first week in April. Look out for interviews with the CEO on the day for an update on the outdoor market. 3 weeks is a long time in this covid environment.
I hold Tracsis shares. Do your own research, etc. etc.
Lots of businesses are looking at potential effects of potential infection. Hard to see any immediate issues affecting Tracsis, though if some big events are still being cancelled later on in the year, it may/will have an effect on their event management income, I guess.
I also traffic volumes on public transport will decline if home working/ self-isolation becomes prevalent, and this may affect revenues in their ticket rebate service etc.
Businesses will have to prepare for some hopefully short term disruption. Fortunately Tracsis aren't exposed to any debt issues, which of course brings it own pressures when revenues dip, even short term.
Having flirted for a while with being just under the magic £8 barrier, with the RNS today, it passed through easily.
Looks like someone is trying to acquire stock, but it is relatively illiquid, so mainly small amounts. If someone acquired £1m worth I suspect either one of the institutions has top-sliced, or the previous CEO who has sold some on several previous occasions.
The RNS was generally positive
>£1M bought yesterday.
Happy New Year GE17!
New Govt, new uncertainties I guess. Hopefully there will be some good opportunities for Tracsis in the coming year.
I doubt whether acquisitions will get any cheaper, and the danger is that buy low profitability businesses at decent prices means smaller returns, unless you are really lucky. I have seen to many acquisitive companies carry on buying low profit entities, acquiring debt, and then falling into low returns, and panicking when there is no market to raise finance to service debt.
Fortunately the quality of Tracsis management have not fallen into that trap, which usually follows management wanting to please the market with activity rather than accretive finds.
There is no particular downside of building up cash waiting for good opportunities.
Hope it is a good year for Tracsis.
Regards
Hi Muzzletoff,
Agreed, I did not see the move to over £7 in this recent rally.
Good results given the challenging environment for the Train Operating Companies during 2019. Good to see the positive news from the RCM division.
The possibility of an election and the delayed publication of the Williams review (due early next year) were major clouds of uncertainty throughout the year. Further delays to the Williams review and the new Government’s ambition to direct long overdue additional transport investment to the north could prolong the uncertainty for the TOCs.
Worth noting, Tracsis have a strong track record of adapting to the shifting environment for the TOCs and this year’s 20% plus increase in group turnover was impressive. I hope restoration of margins and EPS growth are higher objectives for this financial year. Not easy given the uncertainties ahead but I’ll be watching the news flow over the coming months. Any acquisitions early in the New Year could be a strong hint about shorter term prospects.
Do your own research, etc, etc. All the above are my opinion only. I hold Tracsis shares.
Following the election there seems to have been a relief Santa rally. So we have headed up to the £7 mark. This seems to pitch the PE at 22x which is probably a good platform to steady at if we can. I think it has lost some of its early growth sparkle in the market PE, so a sign of maturity pending any unexpected earnings upside.
According to Sunday Telegraph Trainline are developing an app that will assist tarin user to claim back on delays. This will tread in an area that Tracsis has invested in through an acquisition.
Interesting to read next week RNS on prior year trading, and anything new it has to say.
Getting more worried that whilst Tracsis doesn't lack foresight on what the market might need, it lacks the size necessary to develop and market it quickly, particularly in the area of data management, and traffic app matters, where the players with big tech platforms have huge potential leverage.
Maybe its time for a slightly bolder vision if it is to continue in this side of the business.
Apparently Uber are considering developing their nascent train business.
Scooting around Google etc this seems to be mainly linked to ticketing incentives. I see Virgin already has a tie up with Uber no doubt for train/drive offers.
Could be a bit of a worry for Trainline, but at this stage don't see much of a threat to the likes of Tracsis whose activities are more niche.
However, perhaps it is also a warning to the slow and steady approach that big platforms have scale of data or reach where they can swoop, as with the likes of Amazon/Google etc. and suddenly have a marketing lead.