Author Topic: CXZ  (Read 29 times)

galumay

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CXZ
« 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



« Last Edit: January 14, 2020, 04:41:07 PM by galumay »

galumay

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Re: CXZ
« Reply #1 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 26c