(MENAFN- ProactiveInvestors)To understand how vehicle tracking firm Trakm8 (LON:TRAK) will evolve it is important to have a grasp of how technology is developing. Everything from fridges and tumble dryers to huge industrial turbines are now able to communicate wirelessly to a central hub or in the case of household appliances personally to you via your smartphone. I'm talking about the machine-to-machine revolution; it is here and it is going to be huge. Trakm8 has the platform that allows humans to talk to and guide machines. But while it is has cracked the code it is yet to mine this lucrative seam. This is not borne of sloth. No it is a reflection of just how successful it has been in commercialising the current business stream based around vehicle tracking. 'We are so flat out meeting the opportunities we currently have' said chairman John Watkins. 'So we are not looking at anything else. But this doesn't mean we couldn't and that we won't.' Its 'black boxes' are deployed by insurers such as Churchill and Direct Line Group while vehicle tracking software and hardware are taken by fleet managers. They aren't just location devices the Trakm8 platform allows users to measure engine load and revs per minute. So it can be used to moderate in-car behaviour. So a van driver with a lead foot or a touch of boy racer might be encouraged to take a lighter more considered approach changing gears earlier rather than trying to achieve maximum acceleration from the lights. Believe or not this close scrutiny leads to immediate and significant savings to fuel bills. 'The payback [on using the technology] is pretty quick' Watkins told Proactive Investors. 'What we discovered going to the insurance marketplace and using the same data off the vehicle (general engine load and revs per minute) we could identify driver style. 'We could use it to draw general conclusions and band people in a way that shows us the good efficient drivers.' The recent results reveal the company's transformation from a hardware supplier to a vehicle tracking and software as a service business has been a successful one. Revenues rose 38% to £11.7mln in the six months to September 30 with recurring sales advancing 65% to almost £4mln. Underlying earnings (EBITDA) were £1.9mln a rise of almost 70%. finnCap's Lorne Daniel is predicting turnover for the current year will rise to £26mln from £17.9mln 12 months earlier advancing then to £31mln. Adjusted EBITDA is expected to jump a full £2mln to £4.6mln for the 12 months to March 2016 motoring from there to £6.7mln. Future growth will come from making steady inroads at home where it is one of the market leaders but where the opportunity is nevertheless significant. 'The organic potential of the business is very strong but it is very UK-centric' the Trakm8 chairman said. 'The market is growing. So we can get some decent growth by following the market and just staying in the UK.' Of course there is the opportunity to roll out its technology overseas. It already has a presence in Czech Republic where it has an engineering base; it has supplemented this with a sales force. And there may be chances to work with customers as they move into new territories. 'There are some quite significant opportunities we are addressing hoping to win' said Watkins. 'This could lead us to follow the customer who is using the UK as a lead market to roll out into other markets.' The Trakm8 chief isn't averse to making bolt-on purchases – the company paid £3.3mln for DCS Systems. But it did so for camera technology it didn't have and went down that route because presumably it was cheaper and quicker than growing this arm from scratch. 'Acquisitions are something we have done but we don't have to do an acquisition to give our shareholders a good return on their investment' said Watkins. 'If it was something we didn't have in-house and was significantly earnings enhancing we might do it.' The share price has increased more than 300% in the past 12 months to 269p. This values the business at around 24 times forward earnings coming down to a more reasonable 17 times by 2017. Benchmark that against larger rival Fleetmatics which is listed on US and trades on 50 times earnings and you'll realise Trakm8 offers very decent value at current prices. finnCap reckons the stock is worth 318p a share which means the shares would have to advance a further 18% to hit that target. And as the latest round of results showed Trakm8 has a tendency to under-promise and over-deliver. In other words the stock has enough in its tank to carry on along its current trajectory.
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