Journeo – Doubled Profits in 2022

The 2022 trading year was transformational for Journeo (LON:JNEO), the information systems and transport technical services group.

It was seen as a defining point in the group’s development.

The Ashby-de-la-Zouch based company yesterday reported a 35% increase in revenues for the year to end December 2022, to £21.1m (£15.6m), with the underlying pre-tax profits doubling to £1.2m (£0.6m) and more than doubling earnings to 9.80p (4.46p) per share.

The Business

The £26.5m capitalised business currently has three operating companies:

Journeo Fleet Systems: CCTV video surveillance to improve passenger & driver safety, telematics for vehicle and driver performance monitoring, real-time communications for remote condition monitoring and automatic passenger counting.

It provides fleet operator systems, including automatic passenger counting, driver displays, next stop announcement displays, on-board Wi-Fi, camera monitor systems, and telematics and driver behaviour for buses, coaches, and specialist vehicles; and forward facing and saloon CCTV, automatic passenger counting, station information security systems, and train Wi-Fi for rails.

Revenues in 2022 were £12.49m (£9.29m).

Journeo Passenger Systems: design, manufacture, installation, and management of hardware and software for electronic public transport information systems, in and around towns, cities, ferry terminals and airports which includes smart-ticketing and wayfinding.

It offers passenger transport infrastructure systems, such as bay, stretched in-shelter, summary, full-colour LED, low-power E-ink, and solar-powered TFT displays, as well as interactive wayfinding totems, air quality sensors, in-shelter closed circuit television (CCTV), and bus station Wi-Fi.

Sales £8.63m (£4.06m).

Infotec: design, advanced manufacture, installation and software management of information displays hardware for rail applications in stations, on-platform and on-vehicle. This company was acquired earlier this year.

Big Advance In SaaS Subscriptions

The group reported that there was a strong growth in SaaS subscriptions to the Journeo Portal, increasing connections by 150% over the period to 10,000 connected vehicles (2021: 4,000).

The highly secure web-based SaaS application empowers transport operators to monitor the health and performance of their systems in real time. The subscriptions generate monthly recurring revenues.

During the year there was a large-scale adoption of the group’s technologies, including its largest ever three-year £9m framework agreement with First Bus UK and largest software-led sale following a two-year £1.2m agreement with Scotrail.

Elsewhere the company expanded its Airport capabilities following the £0.7m award at Dublin Airport for passenger transfer solutions and £0.9m order for high-precision airside telematics at Heathrow Airport.

It has recently won a contract with Gatwick and is soon working on another at Bristol airport.

Yesterday the group also announced another couple of contract wins in Wales, supplying passenger information systems worth £1.6m.

Management Comment

On the group’s results CEO Russ Singleton stated that:

“I am very pleased with our performance in 2022 which saw sustained improvement in order intake, revenues and profits. This performance was delivered in a continuing challenging market environment coupled with pressure on our global supply chain.

It is a reflection of our unwavering focus to execute on our strategy, which is proving effective. 

The recent acquisition of Infotec, complements our existing business and strategy well, and the enlarged group strengthens our position further with a healthy order book and growing sales pipeline based on our intellectual property and expert knowledge.”

Broker’s View – Trebled Profits For This Year

Analyst Andrew Renton at Cenkos Securities rates the group’s shares as a Buy.

His estimates for the current year to end December are for a 56% increase in revenues from £21.1m to £33.0m, with a trebled lift in adjusted pre-tax profits from £1.2m to £3.6m, while basic earnings per share are set to rise from 10.3p to 17.8p.

Renton considers that the group’s valuation looks attractive, while being well below the rating given to its peers.

My View – Heading A Lot Higher

The group has a growing sales pipeline and a healthy order book, while cash at the end of this current year is expected to be around £6.6m.

Last Friday I stated my view that the group’s shares, then 147.5p, could soon rise to 175p or thereabouts.

They could well go even higher still.

Last night, after the results, they closed at 158.5p having hit 166p during the day.

These shares are still for buying, while awaiting more good contract news and guidance for the coming year.

(Profile 07.04.21 @ 95.5p set a Target Price at 120p*)

(Asterisks * denote that Target Prices have been achieved since Profile publication)

Useful Note – there is an Investor Meet presentation by the company on Wednesday of next week, 5 April at midday.