JOHANNESBURG – Vehicle tracking company Cartrack is planning to list on the main board of the JSE in early December, it announced on Thursday.
Cartrack is present in 18 countries across Africa, Europe and Asia and said it would list in the JSE’s support services sector. The company offers fleet management, stolen vehicle recovery and telematics solutions. At October 31, it had a subscriber base in excess of 400 000 units.
The primary reason for listing, according to Cartrack CEO, Zak Calisto, was to lift the company’s profile and generate more brand awareness. This would make it easier to engage with large foreign firms, like Volkswagen, for instance.
The company has 300 million shares and is looking to issue up to 47% of that, with current shareholders retaining a minimum of 53%. Calisto would not comment on how much capital Cartrack was hoping to raise on listing, but said the offer would be available to retail investors.
“We believe it is now time to enter the next phase in Cartrack’s evolution and intend to enhance Cartrack’s profile by offering a wider group of investors the opportunity to benefit from our future expansion plans,” he said.
Calisto told Moneyweb that Cartrack’s main focus would be Asia, where the sheer density of population and number of vehicles was a compelling opportunity. It established start-up operations in Singapore, Malaysia and the Philippines in the last 12 months, and is looking at another six or seven countries in the region.
While 76% of the group’s revenue is currently derived from its South African operation, Calisto said it would be ideal if the split were 50/50 in the next four to five years. He said Cartrack favoured organic growth, spending 12 months doing proper evaluations of a market before building each business up slowly.
“Low initial set up costs allow us to enter new markets quickly and set up stable operations in a cost-efficient manner on relatively low trading volumes,” said Calisto.
High dividends expected
Cartrack has achieved annual growth rates in both revenues and net profit of more than 20% in recent years, the company said in a statement. It generated full-year revenue of R637 million for the year to end February 2014 and net profit after tax of R168 million.
Calisto said the company had been paying dividends in excess of 70% of net profit every year. It expects its dividend payout ratio to be 65% to 80% post listing and forecasts net profit after tax of R204 million for the year ending February 2015, and EBITDA of R323 million.
Stolen vehicle recovery remains core to the business but its fleet management/telematics offering is posting strong growth. More than 50% of its revenue is now derived from telematics, which involves collecting and processing complex data from vehicles, including driver behaviour.
Cartrack offers a cash-back recovery warranty to consumers in the event of non-recovery of their stolen vehicles and said it has a 94% success rate in stolen vehicle recovery.
Calisto was confident that Cartrack would not become redundant in light of tracking and telematics technology now being installed into vehicles at manufacturing stage. “Ultimately you still need a central processing database to go through the algorithms and produce data to the end user. Our technology can collect and process data from our own units and any other manufacturer’s unit,” he said.
He pointed out that of the 1.2 billion vehicles on roads worldwide, only 25 million vehicles are fitted with tracking devices, pointing to exciting growth opportunities.
Cartrack will issue a pre-listing statement early next week and begin its road show.