Gain to date: 40.4% Orig­i­nal en­try point: Buy at 515p, 22 Fe­bru­ary 2018


THE TRANS­PORT TECH­NOL­OGY and an­a­lyt­ics com­pany has been en­joy­ing a spell of strong de­mand so while an­a­lysts had been an­tic­i­pat­ing rev­enue of £36.15m and ad­justed op­er­at­ing profit of £8.2m for the year to 31 July 2018, in­vestors can now ex­pect rough £40m and £8.5m equiv­a­lent fig­ures.

Trac­sis (TRCS:AIM) pro­vides the tech­nol­ogy tools to help Net­work Rail and train op­er­a­tors im­prove per­for­mance, cut ca­pac­ity prob­lems and keep ser­vices run­ning. It also pro­vides tech­nol­ogy-led in­sights on pedes­trian and road traf­fic for in­fra­struc­ture plan­ning or or­gan­is­ing large and com­plex events.

En­cour­ag­ingly, both sides have wit­nessed im­proved busi­ness mo­men­tum, but there is also the good news of bet­ter profit mar­gins at its traf­fic data op­er­a­tions, a trend that Trac­sis sees con­tin­u­ing into the new fi­nan­cial year and be­yond.

Us­ing new tech­nol­ogy and an­a­lyt­ics to solve prob­lems for of­ten creak­ing trans­port sys­tems ap­pears to be an in­creas­ingly ex­cit­ing space. Yet the emerg­ing na­ture of this niche sug­gests progress will be more likely in fits and starts rather than lin­ear.

Trac­sis re­mains a high-qual­ity busi­ness where self-funded ac­qui­si­tions have ma­jor scope to add ex­tra value be­yond or­ganic growth driv­ers.

As a re­sult, some in­vestors may be happy to hold for the longer-term but a 40% gain in six months sug­gests that oth­ers may choose to take some of that profit off the ta­ble now. That is how we see the cur­rent sit­u­a­tion given a for­ward price to earn­ings mul­ti­ple of 27.6.

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