Journeo – increased orders and positive Trading Update

This little group is valued at just over £10m, yet it is in line to make £1.2m profits this year and £1.8m next year.

Its shares could easily appreciate 50% and still look undervalued.

The Business

Journeo (LON:JNEO) provides solutions to the transport community that captures, processes, and displays essential information to enhance journeys in the UK and mainland Europe.

The company operates in two segments, Fleet Systems and Passenger Systems.

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.

The company also 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.

In addition, it offers various passenger systems, including real time information, advertising, and bus station management, as well as real time information displays, multi-modal templates, web departure boards, mobile-EPI, and template editor services.

Very Positive Trading Update

This information systems and technical services provider announced its Trading Update for the first six months of the year on Monday morning.

It reported a 23% interim revenue growth to £8.9m, with fleet systems up 31% at £4.9m and passenger systems 15% better at £4.0m.

CEO Russ Singleton stated that: “The group performed well in H1 2022, generating significant order intake and delivered revenue growth in both the Fleet and Passenger Systems divisions. Increased demand for cloud-based applications, which improve productivity and reduce costs is helping to secure new and existing customers. A strengthening order book and a growing sales pipeline of future opportunities underpins our confidence for 2022 and beyond.”

Order Book – Increased Visibility

In the last 4 years, the company has invested over £5m in research and development, enabling it to design and supply the best solutions for customers’ complex requirements and the demands of modern public transport.

And that investment is beginning to pay off.

The group’s order book at the end of June stood at £12.9m, up 36% in the first half-year, which gives it increased visibility into the second half and beyond.

In December last year the group extended its £1.6 million framework agreement with Arriva UK Bus and it was awarded a £0.7m agreement with GB Railfreight in January.

In March the company won a £2.1m order from the City of Edinburgh and it also tied up deal with Vision Systems France and with 21^st Century AB in Stockholm.

April saw a £9m agreement with First Bus UK.

Contracts worth £1.7m with Nottingham City Council were awarded in June.

In July the company gained a £0.6m order from a Northern Transport Partnership bus station.

This month it has gained a £0.9m contract with Heathrow Airport.

Broker’s View

Cenkos Securities, the group’s NOMAD and broker, rates the shares as a Buy and ‘materially undervalued’.

Their analyst Andrew Renton has estimates out for revenues of £18.0m for the current year to end December and adjusted pre-tax profits almost doubling from £0.7m to £1.2m, with basic reported earnings of 10.4p per share.

For the coming year he has £21.6m revenues, £1.8m adjusted profits, and 17.1p in reported earnings.

My View

This year will be another record for this tiny group, it is destined to grow significantly and just look at those top name customer orders coming in recently.

The shares, which peaked at 154p In April this year, are now only 120p, at that level they are trading on a mere 7.02 times prospective price-to-earnings ratio.

That is far too cheap to be missed.

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

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