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.
BlackBull starts coverage on undervalued Rakon | BusinessDesk
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 positioned 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.
Kiwi Property Group
Kiwi Property Group shares held flat when it delivered its full-year result, which was inline with expectations, with a full year of no covid interruption.
Operating profit came in at $129.6m, up +11% on strong rental growth offset by higher interest expense, while paying out a 5.7 cent per share net dividend (after tax), and guiding that dividend to hold flat for the 2024 financial year and reinstated its Dividend Reinvestment Plan to help maintain the balance sheet strength.
Majority of the major tenants are in long-term leases providing earnings stability over the near-term – a caution is the Vero building (KPG’s 2nd most valuable property) has 24% of its tenants lease’s up for renewal. Given they held their dividend flat we maintain our BUY rating as it trades at attractive valuation to peers its peers and offers investors ~8% gross dividend yield at current levels.