Maestrano Group – really on the right tracks now
5th March 2021
When it feels as though you are going in the wrong direction, I believe that it is sensible to stop, think, then either turn around or try another direction.
And that is what interests me about this tiny little group.
The Maestrano Group (LON:MNO) came to the AIM market in May 2018 with a platform used by enterprises to assemble and serve integrated suites of Cloud applications with value-adding data analytics for their small to medium business customers, delivering real time, automated, and predictive business insights across functions and locations via white-labelled platforms.
The UK based company raised £6m gross through a Placing @ 15p a share, valuing the issued capital at £12m.
Within months its shares collapsed
Within eighteen months the shares were down to just 1p and the company seemed to be driverless.
By then the group was describing itself as an open platform for banking integration, master data management and business analytics.
Action became necessary
A major review of the group’s business strategy and its long-term value growth in May 2019 led its management to accept that they should go out and acquire complimentary products and teams.
In September that year the group announced the £1.2m value-accretive acquisition of Airsight Holdings Pty, which has proved itself to be a highly synergistic deal.
This group offers automated hardware and software solutions on a per kilometre, per asset basis that enable any road, rail or energy network owner to automate inspections, predict failures and dramatically improve asset management.
The software performs a similar function to that of Maestrano, capturing, analysing and reporting on large datasets, but with the addition of sophisticated artificial intelligence capabilities.
The sales cycle is also similar, being sales to large enterprises, including rail networks and road maintenance companies in Australia. It had also had a significantly successful trial by a Japanese rail network.
Shares starting to pep up
A year ago the shares were up to 1.75p, then from June 2020 they started to rise again. Like a phoenix they tripled in value from 3p to 9p by September.
Then, after a bit of a mess-up earlier in the year causing a breach of concert party rules, three of the group’s directors took out lines of stock from a holder, paying 10p a share to do so.
The founder of Airsight, Nick Smith, was named as the new CEO in mid-October.
Thereafter the shares began to come back to life again, touching 18p in early December and again in late January this year after he took up his new appointment.
Several railway contracts have been secured by the enlarged group, which look as though they will gradually turn losses for this year and next into exciting profits a few years down the line.
Broker’s estimates for next three years
Analyst Alex DeGroote at Arden Partners, the company’s broker, estimates a pre-tax loss of £1.2m this year to end June, then £1.6m down next year.
But he goes for doubled revenues at £8m for June 2023, giving a £1m profit and then a £15m sales figure in 2024 to pump in a mega £6m pre-tax, worth 3.9p per share in earnings.
Fresh additional funding well oversubscribed
On Wednesday of this week the group – now described as the Artificial Intelligence platform for transport corridor analytics, announced a £2m Placing @ 13p a share to fund expansion and marketing costs as well as additional working capital.
The shares closed last night at 14.25p at which level I reckon they really do now offer some great upside potential.
Although I see them speculatively doubling and more within a very short time frame,
I am more prudently just setting a Target Price at 18p.