MiX Telematics: Owner-Operated Leader with Long Growth Runway

Samir Patel of Askeladden Capital presented his in-depth investment thesis on MiX Telematics (US: MIXT) at Best Ideas 2020.

Thesis summary:

MiX Telematics is a leading global vendor of telematics services, providing companies with real-time data about assets and the employees managing them. This data increases revenue and reduces costs, resulting in strong ROI for MIXT customers. MIXT’s strong technology and global distribution make it uniquely well-positioned to serve the needs of large multinational companies like Nestle, LafargeHolcim, and Total.

The overwhelming majority of EBITDA is driven by multi-year contracts with a high renewal rate. MIXT’s recurring revenue, combined with the large, underpenetrated TAM (20-30%), should allow MIXT to grow revenue at a high-single-digit to low-double-digit rate over the next ten years, with faster (teens) growth in earnings and cash flow, thanks to operating leverage.

At the recent price near $14 per share, MIXT trades at ~15x underlying economic earnings, which are masked by over-depreciation. Samir believes MIXT is worth $20-25 per share, based both on DCF and historical transactions in the industry. Owner-operator Stefan Joselowitz (“Joss”) has a history of making accretive share repurchases, and has recently been utilizing MIXT’s net-cash balance sheet for exactly that purpose.

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About the instructor:

Samir Patel manages Askeladden Capital, the investment advisor to a limited partnership and separately managed accounts, utilizing a concentrated, long-only, value-oriented small-cap strategy. Outside of investing, he enjoys writing, cooking, listening to pop punk, hiking and backpacking, and reminding people he’s a native Texan.