Growth company with capital gains potential

artrack is not the most liquid of shares on the JSE — but it is a share that probably warrants wider market attention due to its strong growth trajectory.

The business was founded in 2004 as a stolen vehicle recovery specialist. It has since expanded into fleet management products and vehicle tracking and recovery in 23 countries on five continents.

Cartrack has one of the largest vehicle telematics customer bases globally and is among the fastest-growing vehicle telematics companies in the world. It has 960,000 subscribing customers. In the past financial year Cartrack’s total revenue was almost R1.7bn, with earnings before interest, tax, deprecation and amortisation reaching R761m. The return on equity was an impressive 50%.

SA is its largest market, with

Crevenues of R1.2bn. This segment’s revenue grew 27% from the previous year. The Asiapacific region grew its subscriber base by 53% to earn R180m in revenues, up 52% from the year before. This is the company’s fastest-growing segment. In Europe it earned R148m in revenues, while the rest of Africa contributed revenue of R116m. Total global subscriber growth came in at a blisteringly fast 28%.

On the downside, the dividend yield is relatively low at 1.66%, given that it only paid a 30c a share dividend last year. The share offers an earnings multiple of 15.6 times. Given the low dividend yield, despite the strong cash generation in the business, this means that the share price has not had the same strong growth as the customer base has had. Cartrack only listed on the JSE in late 2014 at R10 a share and —