On a technical analysis basis, I took a look at the share price chart for Quartix Technologies (LON:QTX) and decided that it needed investigation.
I saw a graph showing me a parallel formation developing, giving the potential of a jump in the price of this group’s shares from the current 150p to 200p possibly within the next few months.
So, I looked further and noted that on Tuesday of this week the company published a Trading Statement for the 9 months to end-September.
The Business
The group is a leading supplier of subscription-based vehicle tracking systems, software and services.
It was set up in 2001 by four industry professionals in the UK, who have a combined 120+ years experience in systems design, telemetry, embedded computing, communications and database design and implementation.
The group now has more than 30,000 fleet customers globally.
In fact, across some 8 countries, it has installed more than 800,000 units since its start.
Each month it signs up about 400 new businesses to its services.
The Quartix vehicle tracking lets fleet managers view the live location of their fleet vehicles at any time from any device.
Fleet managers from many sectors benefit from the tracking services provided.
And this is the bit that I really like - 94% of the group’s revenue is derived from recurring subscription services.
As an example, a range of Quartix unit customers operate in various sectors, tracking vehicles, and thus operatives, in:
Building and construction: like excavation, painting and decorating, plumbing, electrical services, bricklaying, flooring, drywall, roofing, siding, and air conditioning.
Trades and field services: such as sign installation/ maintenance, shopfitting, pest control, merchandising, machine tools, replacement windows, cleaning, and environmental services.
Transportation: covering the full range of transportation services, including trucking, courier and dispatch work, taxis and specialised services such as the transportation of fine art and valuables.
Security: including CCTV installation, patrol car monitoring, staff transportation, monitoring of expensive plant and machinery, and locksmiths.
Distribution: such as for raw materials, food, poultry, packaging, hardware, electrical goods, jewellery, and component distribution.
The group remains as a leader in telematics technology, by continuing to offer cutting-edge solutions that meet evolving market demands, such as the recently launched Quartix Check walkaround app and the company’s connected dashcam solutions, both of which were well-received by customers and have contributed to overall growth in the first nine months of 2024.
The Latest Trading Statement
Covering the nine months to the end of September the company reported that its renewed focus on its core business continued to drive strong growth in its Annualised Recurring Revenue.
It stated that ARR is the key forward-looking measure of growth and financial performance for the company.
Its ARR increased by £3.1m (+11%) in the 12 months from 1st October 2023 to 30th September 2024.
During the 9m Period, the company's ARR grew by £2.7m, an increase of more than 60% on ARR growth achieved for the equivalent period in 2023 (£1.7m).
Chairman Andy Walters stated that:
"The rate of growth in the Company's recurring revenues, customer base and new subscriptions over the period is very pleasing.
I am immensely grateful to all my colleagues and the management team at Quartix who have so successfully refocused the company on its core business activity since my return to the Board a year ago, and we look forward to the future with confidence."
The company believes that, prior to that announcement, market expectations for its 2024 performance in terms of revenue, adjusted EBITDA, and unadjusted free cashflow were £32.9m, £5.8m, and £2.1m, respectively.
Brokers Views
Analysts Michael Hill and Kimberley Carstens at Cavendish Capital Markets look forward to operational and financial momentum continuing to build at updates in the coming months.
They have a Price Objective out for the group’s shares at 340p.
Their estimates for the current year are for revenues of £32.5m (£29.9m), with adjusted pre-tax profits of £5.5m (£5.1m), generating earnings of 8.7p (8.9p) with an increased dividend of 3.3p (3.0p) per share.
For the year to end December 2025, they see £35.1m in revenues, £6.1m profits, 9.4p earnings, and a maintained 3.3p dividend per share.
Carl Smith and Bob Liao at Zeus Capital have a 280p a share valuation on Quartix.
They estimate sales of £33.1m this year, with £5.6m profits, 8.9p earnings and a 3.5p dividend.
For the 2025 year the analysts go for £35.9m revenues, £6.1m profits, 9.7p earnings and a 5.9p dividend.
Jumping forward into 2026 their figures show £37.8m revenues, £6.5m profits, 10.3p earnings and surprisingly, an uncovered dividend of 11.3p per share.
My View
As I stated earlier, I see this £72.6m capitalised group’s shares rising through the next few months breaking the 200p level.
Last night they closed at just 150p, thereby offering significant upside for such steady forward growth.
I now set a 185p Target Price for the shares.
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