Transense Technologies – ahead of tomorrow morning’s Interim Results announcement, is it worth picking up a few shares in this sensor technology group, now 155p, brokers TP 349p

17.02.2025

Transense Technologies (LON:TRT), which is capitalised at just £23.6m, will report its results for the six months to end-December 2024 first thing tomorrow.

I believe that it should declare a progression in its business, which is still at a very early-stage of its development.

Despite its size it has a host of major global companies lining up to see its wares and give it orders.

The Business

Based in Bicester in Oxfordshire, this company develops and supplies advanced sensor technology and measurement solutions used by some of the world's leading companies to improve performance, efficiency, and safety in demanding, mission-critical applications.

Transense currently operates through two main active business segments:

·       Translogik - develops smart, connected commercial vehicle tyre inspection equipment to many of the world's leading tyre suppliers, fleet operators and service centres. Enabling accurate measurement and digital capture of safety-critical tyre condition data, used to reduce operating costs, improve safety and provide audit records for regulatory compliance.

Key customers include Bridgestone, Goodyear, Continental and Prometeon (Pirelli), and leading independent providers of vehicle fleet maintenance management software.

·       SAWsense - designs, supplies and licences advanced sensor solutions based on proven, patent protected Surface Acoustic Wave (SAW) technology to world leading companies in aerospace, automotive, and industrial machinery (including robotics), enabling improved efficiency and performance of their products.

Key customers include GE Aerospace, Parker Meggitt, McLaren Applied, Airbus and several other confidential Tier-One automotive, aerospace and industrial machinery suppliers. 

In addition, Transense earns residual royalty income from Bridgestone iTrack - a tyre monitoring system for off-highway vehicles that was developed by Translogik.

The associated sales, support and development infrastructure were sold to Bridgestone Corporation, the world's largest tyre producer, in June 2020, and the intellectual property was licensed exclusively to Bridgestone under a ten-year deal expiring in 2030.

AGM Trading Update

On Wednesday 27th November last year, the group issued a Trading Update ahead of its AGM that day.

The Company stated that overall revenues for the first four months of the year to end-June 2025, were 48% higher than the previous corresponding period.

The contribution to revenue from Bridgestone iTrack increased by 23%, and revenues from the combined ongoing trading operations of Translogik and SAWsense more than doubled.

Gross margins were consistent with the prior year at more than 85% of revenue.

The net profit for the Period increased by approximately 10% when compared with the corresponding period, reflecting the costs added in preparation for scale-up of both Translogik and SAWsense businesses.

It noted that the total headcount of the Company exceeded 30 people, compared with 18 previously. 

The move to bring Translogik production in-house has been completed successfully without any significant disruption, delivering the anticipated benefits in efficiency, quality and unit costs. 

Engineering resource has been added to provide improved customer support, ongoing product improvements, and extend the current range to cover new applications and sectors of the market.

Furthermore, the new partnership with Tiretask to provide a software platform for customers in conjunction with the TLGX range will provide the opportunity to offer a complete solution on a subscription basis, rather than the sale of hardware only, with a healthy pipeline of customer trials of this new solution ongoing.

SAWsense participation in the Airbus LandOne and Protean PULSE collaborative R&D projects is now well underway, alongside other customer funded development projects. 

In addition to these activities, the Company continued to see a healthy level of incoming enquiries for its sensing technology from well-known multinational customers. 

It reported that trading had continued to be cash generative, and that the net available cash balance at 31st October 2024 stood at £1.72m (30th June 2024: £1.28m).

Taking all of these factors into account, the Directors believe that the Company is well placed to achieve results at least in line with market expectation for the current year and they are optimistic of prospects thereafter.

Interim Trading Update

On Wednesday 22nd January, the Company updated the market reporting on its first- half trading to end-December 2024.

It reported that the Company continued to trade in-line with market expectations for the full-year ending 30th June 2025. 

It showed strong revenue growth for the first-half which provided opportunities to invest in operational capabilities in anticipation of further growth whilst protecting prospects for current year earnings.

As far as its Outlook was concerned, the Company stated that all its business segments had increased the level of new business opportunities during the Period, and were well-placed to continue expanding in line with the expected growth trajectory. 

Conversion to revenue in both SAWsense and from Bridgestone iTrack was well-underway, whilst there are clear indications that Translogik will deliver significant additional customer accounts in the second-half of the financial year.

The Directors considered that it was an opportune time to invest in the people and infrastructure required to fulfil the evident strategic growth potential. 

The recruitment process is largely complete, and work is well underway in specifying the production equipment and supply chain activity needed to support long-term volume prospects.

Management Comment

Chairman Nigel Rogers stated that:

"The first six months of the financial year has seen us continue the strong underlying growth, whilst successfully recruiting a team that can take the business to the next level of performance.

We remain in line with market expectations in the current year, and the opportunities ahead of us give us significant optimism for the future.

SAWsense is making excellent progress and the pipeline for Translogik is also very encouraging.  

The Bridgestone iTrack licence is approaching its fifth anniversary in June 2025, marking the half-way point of its duration. 

Although unit royalty rates per installation will decrease next year, there is momentum behind the installed base indicating continued strong income flow for the next five years. 

We will continue to reinvest some of this in the two operating businesses, both in people and infrastructure, to support our long-term growth expectations."

Brokers Views

Analysts Max Hayes and David Buxton, at Cavendish Capital Markets, are obviously very bullish about this group’s prospects.

They have a Target Price of 349p out on the Company’s shares, having noted that the group’s distribution agreement with Haltec Corporation, a leading US tyre valve and management solutions company operating globally across the mining, commercial fleet, truck and aviation sectors – will be delivering on a key FY25 target for its Translogik division.

The analysts have a current year, to end-June, estimate for £6.0m (£4.2m) sales and adjusted pre-tax profits of £1.6m (£1.4m), generating earnings of 7.7p (7.0p) per share.

For 2026 they see £6.5m sales, £1.3m profits and 6.5p per share in earnings.

The 2027 year could show £7.7m revenues, £2.3m profits and 11.3p in earnings.

My View

The shares, which touched 193.50p last September, have since been down 146p on two occasions before bouncing higher.

Now at 155p, valuing the group at £23.6m, I have the feeling that they could well start to rise again from this level.

(Profile 17.09.21 @ 102p set a Target Price of 127.5p*)

(Asterisk * denotes that Target Price has been achieved since Profile publication)