Member Info for dc2_

Some news

https://www.trakm8.com/news/the-fuel-store-chooses-trakm8

I've said something similar before but I'll reframe it as a question. If you do accept that some form of comparison can be made between TRAK and QTX then is all the obvious bear news (I read the same old generalised arguments/personal attacks all the time) already priced in given QTX has a market cap of £146m and TRAK has a market cap of £10m?

Examples:

1) I think debt is already factored in. Yes, they could break the covenants but the risk is reflected in the share price.
2) Clearly, COVID is an unknown and this may not be completely priced in because it may disproportionally affect a company which has debt (QTX is cash rich). However, I expect some of the impact of COVID is factored in for all companies.
3) Client confidence in the company's ability to deliver could create a mass exodus. Always a risk and there will be a tipping point where debt etc cannot be serviced because of attrition. A fleet attrition rate of 10% (QTX 11%) during the worst period (COVID aside) for Trakm8 suggests this has not been the case. It is not to say that clients weakly held and are now reconsidering because of COVID but my own experience suggests that companies are not disturbing the apple cart until they see how they are affected.

Also reported here

https://www.insurancetimes.co.uk/news/penny-searles-returns-to-telematics-in-senior-position/1433882.article

It certainly makes an interesting read, especially when talking about ambitious growth, new products and a number of high-profile contract wins. It is also good to hear what Penny will bring to the table in terms of expertise. However, she is only a NED so it seems her role is very much reduced. I am not saying she isn't a positive addition to the firm. In some ways it implies that Raza's NED position also has weight (which I am sure it does).

I am curious to why it is a news story when Peter's appointment was not. Peter did write some news but there was no big announcement. I have noticed they have been more committed to putting news out so perhaps this is this week's. Anyone who follows their LinkedIN news goes crazy at the recycling of news stories so it is good to hear something different.

They can't win with that facility. Whilst I tend to think they should not manufacture they do. They took the lease on as a result of work coming in from things like the Iranian deal. They are damned if they do, damned if they don't. I am sure people would be complaining that they didn't have the capability if those deals came through and they did not have the extra place. As it happens it did not pan out and they have an empty (I have no proof) building.

Where is your evidence that they are losing customers hand over fist? They state that attrition rates are usually 10% and they are projected 20% this year as a precaution.

I'm sure JW has cited client confidentiality in the past so the RNS does not need to have the exact details. We are not even told who the client is. However, we do know it is a large food retailer and that somewhat refutes the argument that companies will not work with Trakm8 because of debt.

** =didn't sell out

I would add the Cowley's to that statement BUT if any of them do move on then you could expect one or more of them to start dumping their shares. TBH, I am surprised the former FD has sold out. Whilst it is wishful thinking I think the only way to square that circle is for Trakm8 to be taken out.

Very true

Just for clarification (which I did not think I made clear), my post was to suggest that in terms of revenue Trakm8 is 80% of QTX and so you could assume that a like for like fair share price would be £2.40. However, sometimes it is not as simple as scaling all things that way and there will be economies of scale that QTX would have. Now I am more confused by my own posts!?

Perhaps, and maybe a bit too naive and optimistic, it would be better to frame the share price with reference to QTX. They have roughly the same number of shares and are priced over £3 as we speak. Both do similar things so a comparison can be made.

SUMMARY
-------------
From their final results (trak vs QTX). I apologise in advance for errors

Revenue £19.8m vs £25.6m
Fleet 77,000 units vs 150,000 both with roughly the same attrition rates (10% vs 11%)
Insurance units 168,000 vs hard to say (38,000 units quotes as new installs)
Insurance represents 66% vs 20% of business
R&D £4.1m vs £0.7m
Debt £5.6m vs £0
Cash £1.7 vs £6.8m
Dividend 0p vs 10p (ok, cancelled now)
Client acquisition costs - I could not work this out for Trakm8 vs £6.1m
Hard to see what QTX pay for staff costs but suspect it is less than TRK (with some compensation paid as dividend)

The extra revenue (perhaps due to their emphasis on fleet over insurance) gives QTX the edge. They appear to spend similar amounts but considerable less on R&D and this may give them a disadvantage in the future BUT equally it may have been a better long term decision to spread development costs and be slightly behind the curve. If Trak had the extra revenue then the debt problem would not exist and possibly vice versa for QTX (assuming they maintained there spend). QTX appear to spend a lot of money on client acquisition and this appears to be working.

I would imagine the money is irrelevant to him, it is the intellectual challenge that appeals e.g. If he calls it wrong then what does it say about his decision making.

IMO the bears cannot construct any meaningful argument that isn't already priced in. Statements such as they are crooks or they will be gone by the end of summer are not well reasoned. This makes me think the bear argument is weak.

Personally, with no debt repayments for 12 months, advantages in government assistance during this period and £1.7m in the bank I feel confident they will be OK for the next year. Of course, there could be huge fall out as a result of COVID.

Thanks....

Thanks to KBYK for pointing the report out, a 92 page light read.....(no I did not)

I am no accountant. I was interested in the debt. It is stated that it is the same as last year. However, I see £4.5m (£4.4m), £1.5m (£0) and £0.9m (£1.8m) which looks like an increase to me (£6.9m vs stated £5.6m). Page 13. Where did I go wrong?

Page 73 gives the interest charges (per annum). I must admit I thought the new £1.5m loan would be cheap but it is 8%.

Still related to debt, in some better news they have agreed to defer all payments for HSBC and MEIF until 2021 (page 29). The upside is no loan payments to be made for the next circa 12 months. The downside is they will accrue interest.

Personally I am unsure why they did not use the CBILS loan. It is possible that this may have invalidated some of the covenants. Any ideas?

Finally, there is talk about Trakm8's abuse of the furlough scheme. Page 22 clearly states they continue to communicate and train people who are furloughed. I have checked and this is legal.

There is lots of encouraging stuff through-out and their forecasts (I know they are not giving guidance) assumes a more pessimistic view of the impact of COVID ( page 57). I.e The assumption that the attrition rate of fleet will increase from the usual 10% to 20%. (page 9)

My thoughts were either a disgruntled investor or competition trying to compromise the company by getting the market cap down. I am at a loss to understand why so much effort is put into posting from people who claim they do not have an interest.

Click in this link https://uk.advfn.com/forum/search?q=old+man+Watkins&index=posts&post_post=on which is looking at posts that use the phrase "old man Watkins" and see if you can jump to any conclusions. It is not a given but it does make you wonder.

Indeed, like you say, it doesn't really matter - the reason I highlighted it was to demonstrate that I have actually met them by adding something that few would know (unless you read the directors entry in https://static.trakm8.com/static/downloads/230025_trakm8.pdf).

I have met them a couple of times (All three of them - Tim, Matt and Maddie). This was in the context of being a third-party integrator of their devices. They always struck me as switched on and forward thinking so you may be right about the value of the patents. In some ways the patents do justify Matt's position - being responsible for big data always struck me as a title for titles sake.

Interesting, but I am still bearish on patents. Companies like Seeing machines are using deep learning algorithms in a fast growing research area and so it could be that they find an algorithm that does a similar job without violating the patent (I will hold my hand up and say I do not know the details of the patent).

Whilst I cannot afford the new Discovery (because of my poor investment decisions) if you watch a trailer for it you will see they have an amazing 360 birds eye view camera system (common in the tracking industry) that can even make it look like you are outside of the vehicle. How difficult is it to measure objects that are within a certain distance of your vehicle for a certain amount of time. Perhaps the patent is doing much more but I cannot see the added value.

I feel sorry for anyone who posts anything remotely bullish on that thread (or should I say anyone who posts anything other than the extreme bear narrative). One poster who, in a tongue and cheek kind of way, pointed out his disappointment with the turning of a well known bull into a massive bear was asked to prove his point. This, whilst rampant claims of fraudulent pump and dump behaviour, insider trading, loss making contracts, general disrespect to the BOD and Raza, talk of a loss of 40% of all tracking units connected to the server, massive profit warnings and the imminent demise of the company all go unchallenged. All just speculation.

I would appreciate a proper bear case (Dave, if you are reading this.....). As I see it (not exhaustive) :

1) How does COVID affect the company and its clients
2) What are the barriers to Trakm8's ability to maintain/pay back its debts.
3) What is the market like - has it become too cannibalised - are there any signs of other failures
4) Are the BoD signing contracts that lose them money and if so why.
5) Why did Raza buy given his insight (no, not to pump and dump).
bored now.....