KRM22 (KRM) : Corp

Full-year trading update

Key data

  • Share price (p) 52.5
  • Target price (p) 100.0
  • Market cap (£m) 10.0
  • Enterprise value (£m) 10.7

KRM22’s trading update for its maiden full 12-month period reveals EBITDA in line with unchanged expectations, from revenue of £4.0m (£4.3mE). ARR of £4.5m (constant currency, £4.3m at current rates) shows constancy from October, with visibility of growth into FY20 from existing customers. In addition, a small number of contract signings were slightly delayed and are expected to close imminently. The pipeline remains strong, as KRM22 continues to develop its presence and gain the critical mass which will provide a virtuous circle in reputation and revenue. Action taken in 2019 has reformed the cost base, with a further boost from $FX in 4Q19 (offsetting the –ve $FX effect on revenue), and expectations for positive EBITDA and free cashflow in 2H20 are unchanged. With gross cash of £1m (£0.9mE) and unchanged expected net debt of £1.2m at year end, we look forward to results in March/April, further contracts wins, and continuing development of momentum.

Andrew Darley 020 7220 0547 adarley@finncap.com

Quartix (QTX) : Corp

Fleet growth offsets insurance transition

Key data    

  • Share price (p) 364.0
  • Target price (p) 425.0
  • Market cap (£m) 174.2
  • Enterprise value (£m) 169.1

This is an impressive post-YE trading update with raised guidance for FY 2019. We lift our estimates in response and extend our forecasts out to FY 2021. Fleet telematics continues to demonstrate strong growth, offsetting the ongoing transition away from low-margin Insurance business. Provisionally, group revenue will thus be in line with LY but with >80% from Fleet (FY 2018: 73%). Our adj. EBITDA expectations rise from £6.8m to £7.0m (FY 2018: £8.3m) and this generates an excellent FCF of £5.9m (FY 2018: £5.6m). Looking ahead, we lift FY 2020 revenue hopes but ease profit as Quartix signposts further investment to capitalise on the success in Fleet. As shown in the year just gone, investors can expect continued growth in Fleet subscriptions and revenue allied to strong cash generation over the next two years, driving the share price up towards our target.

Lorne Daniel 020 7220 0545 ldaniel@finncap.com

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