seekrit squirrel

Finance => Shares => Topic started by: galumay on January 13, 2020, 06:47:52 PM

Title: CXZ
Post by: galumay on January 13, 2020, 06:47:52 PM
Looking at taking a position in CXZ, CXZ Telematics.

Connexion Telematics Ltd develops information technology solutions for automotive industries in Australia, the United States, Canada, and Mexico. Its principal products include CXZ Telematics, a cloud based integrated vehicle management system that gives control of a fleet of cars, trucks, and other vehicles from a central control point; and miRoamer, a multi-platform app, which provides an Internet radio and music infotainment service through approximately 35,000 stations to consumers worldwide. The company also provides Commercial Link, a vehicle management system that helps to manage vehicles; and WEX Motorpass, a real-time fraud protection tool that offers security. The company was formerly known as Connexion Media Limited. Connexion Telematics Ltd is headquartered in Melbourne, Australia.

The company specialises in vehicle telematics, which is essentially the the integrated use of telecommunications and informatics for application in vehicles and to control vehicles on the move involving GPS system technology integrated with computers and mobile communications technology in automotive navigation systems. Typically its an integrated approach with installed hardware in the vehicles, software to monitor and report vehicle information like fuel use, speed, maintenance shedules, roll angles, braking force etc and remote monitoring with cloud storage.

CXZ has developed a specialty integrated solution for car companies so that dealers can monitor lend and hire cars to potential and actual customers, they have a significant contract with GM in the US for their dealer network.

The business is free cash flow positive and if they are able to grow customer base the increased revenue should see the revenue drop pretty well straight thru to free cash flow. Any growth should see significant value creation for the business.

The risks are lack of growth in a competitive market with low barriers to entry, like all SaaS businesses, CXZ claims high barriers to entry - and as with most of these businesses I am unconvinced that this is true. I think there is a significant risk that CXZ will be unable to grow the subscriber base in a meaningful way.

There is also the risk that at the end of the current 3 year deal with GM, it will not be renewed and given the significant part of the business this contract provides, it would have a highly detrimental effect on valuation. Its probably unlikely, but its possible.

My view is that at the current price of 2c its not expensive and worth a small position to see if management can execute, the upside is large if they can and given the business is debt free, cash positive and profitable, its unlikely to completely fail.

Competitors - cTrack, Mix Telematics, eRoad

Mix is international, African based, profitable. eRoad, NZ based not profitable, cTrack owned by Inseego, US tech business, loss making.

bgt 238095 at 0.021c 14/1/20



Title: Re: CXZ
Post by: galumay on February 22, 2020, 02:13:13 PM
Very strong HY results released this week, CXZ up nearly 40% on the news. If they can pick up some more customers it can develop into a very good business. Cash flow conversion is great, straight to the bottom line. I will add some more now in the dips. Currently 0.026c
Title: Re: CXZ
Post by: galumay on August 23, 2020, 12:54:04 PM
FY2020, very strong year as expected, comments above still apply. Wont add to position unless they can remove the single client risk.
Title: Re: CXZ
Post by: galumay on February 12, 2021, 11:34:49 AM
H1 2021, steady as she goes, still profitable but comments from previous post hold true still.
Title: Re: CXZ
Post by: galumay on August 27, 2021, 09:36:43 PM
FY 2021 ended up being a soft finish to the year, the chip shortage & Covid played their parts, still profitable and showed some resilience to overcome.

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Title: Re: CXZ
Post by: galumay on March 02, 2022, 08:30:44 AM
A very tough half year 2022 for CXZ, the chip shortage and general supply chain issues have had a huge impact on the business. Regardless it still turned a small profit and FCF Was actually quite strong but I havent checked to see what is driving that (inventory, receivables, or payables?) A tiny position for me so not too concerning and as supply chains normalise they should see a quick return to increased activity.

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Title: Re: CXZ
Post by: galumay on February 28, 2023, 06:48:10 PM
H1 2023 a big step forward for CXZ, good result considering and resigning the GM contract significant. Went up 90% on the day of releasing their update about the contract!

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Title: Re: CXZ
Post by: galumay on February 09, 2024, 08:48:38 AM
H1 2024 was a good one for CXZ, its taken a while but starting to show some returns for patient investors!

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Earnings about half that after adjusting for Government grants, but even so the Cash Flow Statement really shows the simple power of this business in its present state,

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No PP&E expences, no finance expences, no debt, no leases.

But worth noting the $1.3m OCF, is really $1.0m after deducting Government grants, then deduct $180k for SBC, so $800k then deduct some component of the R&D expences which are certainly Capex, given that its $1.3m this year its a not insignificant amount even if you consider it having a life of 5 years and then work out the NPV of this years share of that. So for 'back of the envelope" lets call it another $300k and we end up with $500k of FCF. Still not too shabby!

The only thing I am not a big fan of is the CXZ specific Bullshit Earnings Bingo, "DMEPS", "NPBT" and "RGS".
Plus Aaryn mentioned "Flywheel effect" which is an automatic 🚩