Welcome to our new product “Friday Takeaway”
This will delve a little deeper on individual companies and focus on non-house stocks under £200m market capitalisation to help raise awareness
| Index | Thursday 24th Oct Close | Weeks change % |
|---|---|---|
| FTSE 100 | 8,269 | -1.4% |
| FTSE Small Cap | 6,895 | -0.9% |
| AIM All Share | 725 | -2.4% |
CRDL- Building Stream
HDD- New Coat
XML- Winning Bet
The Artificial Intelligence (AI) platform for transport corridor analytics, has developed a distinct application in automating railway line inspection. This involves ballast profiling for track stability, vegetation management, overhead line equipment monitoring and geometry analysis combining to make a $30bn global market. Its AI-driven railway infrastructure insights are used to create safer, more efficient and sustainable railways.
It announced Network Rail has provided a Certificate of Approval for Cordel's AI-powered outputs for Electrified lines. The certificate is for the measurement of Overhead Line Equipment using LiDAR (Light Detection and Ranging) data captured from ordinary passenger trains, operated in normal service at line speeds of 140 km/h. It demonstrates compliance for the measurement of static contact wire height, stagger and deviation allowing timely corrective action preventing incidents and improving safety.
The finals to June 2024, are due shortly and the July y/e Trading update anticipated a 45% increase in revenue to £4.4m. At the interims to December revenue was £1.9m and a 27% reduction in EBITDA losses to £0.57m and with improved gross margins at 47% from 28%. The Y/E update reported net cash at £1.02m. In September a further £1m was raised at 6.5p. There were four significant new customer contracts with key wins in the USA, Mexico, the Middle East and APAC.
A key client is Amtrak in the US, with a six-year deal worth $6.7m. Amtrak have reported record passenger delays from extreme weather and have a $100m maintenance backlog. There is a five-year deal with Network Rail and hopefully with increasing income and a development partnership with Angel Trains a large-scale investor in the rail industry. It’s expected that 50% of FY24 revenues will be generated from the Americas where there is a higher likelihood of securing seven-figure annual contracts.
Comment: The chance of large orders and the evidence of scalable profitable growth seems worthwhile.
The provider of advanced surface treatment solutions reported improved H2 in its Sept 2024 year-end Trading Update. The full year is likely to be reported in early 2025, showing a full-year decline of 14.5% in revenues to £4.7m. This is a result of slower oil and gas markets and delayed new business from aerospace sector and there are also clients in energy, flow control and precision engineering. The relatively new CEOs, Matt Hamblin, appointed in June 2024 has a coatings and sales development track record. The strategy is to accelerate revenue growth with an entrepreneurial and holistic approach in identifying and assessing market opportunities to deliver profitable growth.
Its production facilities are in the US and a new one in the UK provide clients with a patented coating process involving advanced tungsten carbide, metal matrix composite coatings which combine exceptional wear and corrosion resistance with toughness and ductility (high tensile stress).
H2 was stronger, and the improved trading momentum was continuing. This combined with the benefit of margin improvement and cost reductions, should produce a positive adjusted EBITDA of c.£0.4m in H2, resulting in a possible break-even for the full year-end against a £0.1m loss. Hardide report trading at net cash positive levels and the revenue cash breakeven point is £5m so it’s just £0.3m short. There is net cash of £0.7m. Shareholders include Amati, Patick Evershed, Marlborough Fund and Unicorn Asset Management.
Comment: The accelerated H2 recovery to an H2 EV/EBITDA of 10x could see the shares grow.
The sports digital company entered into a conditional agreement for the sale of its North America Business to Sportradar AG. This is for up to $30m cash (£23.1m) of which $20m is payable on completion with an additional $10m subject to performance and is payable in April 2025. This follows April 2024’s announcement of the sale of its European and Canada assets for $42.5m (£32.7m). The interims to June 2024 showed the revenue from continuing operations in H1 is $10.4m with an adjusted EDITDA of $0.9m. Cash at end of June was $19.4m, a further $10m payment is due and another $20m likely next month making a total of £38m.The full consideration for both disposals, including all earnout payments due, would generate up to $72.5m (£55.6m) in cash before costs and liabilities.
Once completed, XLMedia will become an AIM Rule 15 Cash Shell, focused solely on the orderly distribution to shareholders of the proceeds. The transaction is subject to shareholders approval at the General Meeting to be held on Thursday 7 November 2024 and the transaction is expected to complete shortly thereafter. Kapitalforeningen, a Danish Wealth Investor, recently increased their holding to 9.9% from 3.1%. There are irrevocable undertakings in favour of the Resolution from Premier Investissement SAS and the Directors representing about 31.2%.
Comment: The cash from disposals is greater than the market cap while a shell should be worth a premium to cash to an RTO candidate. Seems an odds-on bet.
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