Tracsis Share Discussion Threads

[apad] 14/11/2014 09:11

Ireland forward PE estimate is 21.
stewy, I don't like punishing success when the story hasn't changed.
I find that topping up on weakness out of income keeps my inner chimp under control. These are my buying prices for TRCS:
61.0126
75.5536
75.5196
124.8700
158.6676
193.7933
It's now my second biggest holding, with a fifteenth of the market cap of my biggest (RSW) so my rules prevent further increases. I occasionally have to soothe my chimp when he panics and wants to sell, however.
Regarding your 'margin' point - I am not at all concerned about margins as long as the purchase fits snugly into TRCS's competences. It is too small to be a holding company for separately managed entities. McArthur doesn't sound like a Tintin, so that's comforting.
ROR worth a top-up on today's markdown, but I have no available capital.
apad

[stewy_18] 14/11/2014 08:17

Yes Paul, I think there could be buying opportunities better than 365 pence. MPEC sales are uncertain next year. I read the brokers note yesterday and they were uncertain of that MPEC sales would match £5.7 million last year (from the UK at least). So there could be a decline in the high quality earnings part of the business. Then again, if US sales start to kick in or if there are contract wins announced .....

As you say it is difficult but the P/E ratio has risen from 16 when I bought them in 2012 to 28 presently.

One thing I was thinking about regarding the acquisitions is that TRCS are effectively using money from the high quality earnings of MPEC to invest in lower margin businesses like the passenger counting, consulting and rail software. So regarding further acquisitions, I would like to see them focus on the higher end operating margin businesses. I'm not sure how many companies there are that have MPEC earning potential however. And could I return 20% on the cash if it was returned to me in dividends? Unlikely!

TRCS always looks expensive. I must admit to thinking about selling after the podcast because of the uncertainty of MPEC sales next year. But I think in the longer term MPEC will go global. If they can break the US market, they can break any market and as John said word travels fast when you have a proven working technology.

Difficult one, but I can only hope you don't get a buying opportunity :)

All the best

Stuart

[buffetteer] 14/11/2014 07:37

Paul
You could wait for another poor market when they tend to drop near £3 to buy.

[paulypilot] 13/11/2014 18:49

Hi Apad,

Indeed. The thing I like about John McArthur, is that he just gives you a straight answer to any question. He wasn't interested in asking in advance what questions I was going to ask him, he was perfectly happy to just do the interview off the cuff.

The shares deserve a premium rating for management who haven't put a foot wrong with 6 acquisitions to date, and for the prospects for overseas growth.
Also note that management salaries are very reasonable - you get the CEO+FD for under £300k p.a., including bonuses.

No danger of share dilution either, as they're making acquisitions from the company's own cashflow. Every time I look at this share, I wish I'd bought some a year earlier, but it never quite looks cheap enough for me to buy any!

Regards, Paul. (no position)

[apad] 13/11/2014 15:44

oops, ignore query.
apad

[apad] 13/11/2014 15:42

Seems a straight forward sort of a bloke.
One observation: isn't the PER now ~18? Doesn't seem such a high rating.
apad

[paulypilot] 12/11/2014 15:11

Thanks for the questions, I managed to ask most of them, and your questions helped me focus on the main area - condition monitoring, and US expansion.

The audiocast is now live, on AudioBoom and SoundCloud:





Hopefully people find the interview useful/interesting, and thanks for your input with the questions submitted.

Regards, Paul.

[stewy_18] 12/11/2014 13:45

FWIW I have posted my analysis on the TRCS finals here:-


Best

Stuart

ps Paul, regarding my questions, it might be best to substitute "Network rail" with "UK infrastructure customer". They do not seem to mention it in the finals and may be coy about giving out the names of their clients

[apad] 12/11/2014 08:19

Stewy is correct in focussing on condition monitoring. This is TRCS's "moat": they produce the data and then process it - without condition monitoring they are yet another software company that counts things.
I suppose that means I am not convinced about the special nature of the algorithms developed by the founding chinese chap (can't remember his name) from Leeds Uni.
I've not come across these interviews before - looking forward to it.
apad
btw: a first quick read and I can't find sins of omission or commission, on or between the lines!

[stewy_18] 12/11/2014 07:54

Hi Paul,

Great stuff. I'll post my analysis on here later. Here are my questions:-

- What percentage of MPEC condition monitors have you already supplied to Network rail?
- Do you expect to maintain the same margins when selling MPEC in the US?
- Could he possible elaborate on the following scentence:- we see a considerable market opportunity that is many times larger than what we have achieved thus far within the UK. How many times larger?
- What sort of contribution can we expect regarding MPEC sales in US for next year? (Rest of the world sales were only £382,000, so not a huge contribution this year.)
- Have there been other MPEC pilots conducted this year? Do you expect other trails in other countries? Can you give any feedback even if pilots were unsucessful?
- If US MPEC orders are big, will you have issues supplying the product en mass?
- Any aquisitions on the horizon?

It is difficult to get information regarding MPEC as they are very coy on a lot of things including margins, but any information you can get would be great.

A big thanks in advance for giving us an opportunity to ask these. The podcasts really are a great initiative.

Best

Stuart
@TheKingsGambit1

[paulypilot] 11/11/2014 22:37

I am interviewing John McArthur, CEO of Tracsis, tomorrow (results day, 12 Nov 2014), early afternoon. An audiocast will be published around 3pm on 12 Nov 2014, on my AudioBoom channel here:

I'd like to make the interview interactive with shareholders, so please feel free to ask any questions - just reply to this post, and I will collate any questions here at about 1pm tomorrow, and ask John those questions.

Regards, Paul.

[stewy_18] 21/10/2014 14:45

That is a good point APAD. You always have to ask what would happen if things go wrong. I am certainly not a buyer at these levels because of the high P/E ratio. I will have a keen eye on any possible clues regarding other pilots they have launched. Certainly MPEC is being sold in Ireland, so it will be interesting to see if they give a geographical breakdown this year. While I accept your point that a lot is riding on US pilot, it doesn't seem like that much can go wrong. They do not have a competitor and the pilot was extended to a further 6 sites from the initial 5 sites. I could be wrong but if they weren't keen, they would have canned it after evaluating the first pilot on the 5 sites. That however, maybe an incorrect conclusion. It is one I'm happy to work with though. For sure I have rose tinted glasses when it comes to TRCS. Not sure about the valuation here, but it doesn't matter to me because I am in for the long run. Pretty sure there will be more news concerning MPEC pilots but cannot say when. For now I sit and wait.

[apad] 21/10/2014 14:07

s&b
Whilst I accept all of your points and was a ferocious purchaser at £30b cap I am now nervous as TRCS is my largest holding with the most potential to fall.
I cannot find a logical reason to sell otherwise I'd halve my holding - I think a lot rides on the US pilot.
We are leading the small cap rally at the moment, based on no new knowledge.
Good to have reassurance based on argument, but it's going to be an anxious 3 weeks!
apad

[m.t.glass] 21/10/2014 12:22

Six weeks on, and the website images are still missing from several pages. Sloppy.

[buffetteer] 21/10/2014 11:33

Apad
Although the pe is high for 7/14 were now in 7/15 for eps of 19.5p - a pe of under 17x -not expensive .this business should grow well because organic growth will be 5-15% per annum plus acquisitions .together the company can double again in a few years -I don't think the problems of the railway are going away!

[stewy_18] 21/10/2014 11:18

Can't imagine they will disappoint APAD. Revenues in excess of £20 million based on trading statement. I think the revised broker forecasts have £21.5 million. If a large part of that is down to MPEC the margins will be high too. They are normally pretty coy on giving out that data. The PER is racy that is for sure, but then again TRCS has always been expensive. I top sliced at 170 pence and bought back in 213 pence realising that was a bad idea. You only have to look at the potential for MPEC US pilot.

By my calulations, they still have around 30,000 units to supply to network rail (rough estimation. the assumption being they have provided 10,000 already). At £4,000 a pop and 40% margins it doesn't take a lot to see why it has kept the high valuation. Again, I can only specualte what the US market will be worth, but it would have to be way higher than the 40,000 it will supply to Network rail? I can't really say to be honest, but I would have thought it would be materially higher. Hopefully they will give a breakdown of MPEC sales. It will be interesting to see how many they have sold in the US to this point, and also if they mention when that will start to ramp up. Hopefully we will have news about other pilots.

I would imagine the chances of executing a global MPEC roll out would be high. At least, that is what I'm hoping. I would really like to see some evidence of this.

John McArthur thinks it is only a matter of time and I agree with him. Why manually check something when you can automate it? It will be more efficient, cost saving and reduce risk.

For me the consultancy business is secondary but should provide a useful way of pushing for MPEC especially in Oz and New Zealand where they have a consultancy presence. We shall see. As you say only 3 weeks to wait now. I am very relaxed about my investment here. The management team have never promised anything they didn't deliver so it will be a first if the revenues are under £20 million.

Also relaxed about the low dividend. I would rather the found another aquisition like MPEC than return the cach to shareholders at this time. They seem to be very good at acquiring businesses at a low price. Hopefully this will change if they really start to throw off the cash.

Short term, I have no idea where the shareprice will go especially in this market, but I think it will do very well over the next 3 years. It has almost tripled from when I first bought and I don't see any reason why they cannot continue to deliver.

Best of luck

Stuart

[apad] 21/10/2014 09:55

3 weeks 'till results. Stream of rns' on share printing. I guess there will be no US news before results. Terrific interims to match. PER 26, yield less than 1%.
Enormous potential fall if disappointing.
Do I sound nervous?
apad

[stewy_18] 11/9/2014 14:41

Next leg up. Director buying yesterday. Not a huge amount but I think the expectation is that results will be good. Will need to wait until November.

[stewy_18] 04/9/2014 09:43

If you think that is bad, check out TUNG website or lack there of.

[m.t.glass] 03/9/2014 14:56

Disappointing for an IT company to not fix its own website faults quickly. Bad advert!

I too emailed them after my last post.

[stewy_18] 03/9/2014 12:53

Not just you. I have mailed the company to tell them.

[m.t.glass] 03/9/2014 12:34

I can't get images to show on the Tracsis website. The logos on the 'Clients' page and the photos of directors/managers don't load for me using IE and Chrome. Is it just me?

[m.t.glass] 03/9/2014 08:42

News 9:39am today:

Downing holding, reduced in July dip, now back above 6%

[lomax99] 28/8/2014 04:57

I thought the recent dip was over done, so added a few more at
£3.03 - just wish I had added more. I made the mistake of
selling a chunk of my holding at a much lower level a while ago,
intending to run the balance.

[fz13] 27/8/2014 22:01

Well seems you can't always believe the buy/sell indicator in ADVFN...sold on the back of the big 'sell' last week a pure fear trade against better judgement!