Rakon Brings a Dividend

25 maj 2023

Rakon reported strong results today but the pièce de résistance was its dividend of 1.5c per share (roughly ~1.5% gross). We called for a dividend in our initiation of coverage on the company and we’re buoyed that management listened – we think this is crucial to unlocking shareholder value and valuing the stock at a multiple on par with its international peers. Noting good growth in the 5G space alongside its position business, posting double-digit growth on both fronts. Expecting FY23 27M of EBITDA or thereabouts – management hinted at a tightening market; we’re interested to see how this plays out. Interesting parallel with Apple’s Broadcom deal today - onshoring is a theme and RAK is positioning to do well from it.
EROAD reported a fairly poor result. Lots of rhetoric like “management executes new plan” but EBIT is still sitting at negative 4.5M in spite of ~165.M of revenue. We note extremely high wage & admin cost is the culprit here: 57.5M spent on wages and 41.M spent on admin cost – admin cost almost doubled from the year previous.
We think management owes an explanation for this cash burn – the promise of SaaS is high margins and recurring revenue; EROAD’s management seems not to have got the memo. Read more at research.blackbull.com