Cartrack sees clear road ahead. The telematics company says markets for its vehicle tracking devices remain largely underpenetrated despite strong growth over the past six months.

Cartrack says the South African market for car tracking systems remains underpenetrated by companies and consumers alike, despite the country having one of the highest telematic penetration rates in the world.

The telematics company managed to grow local subscriptions by 30% in the six months to end-August from a year earlier, lifting its total global subscriber base by 28% to 849 000. As the subscriber base continues to grow, it says it will realise greater economies of scale and operating efficiencies. It also adds to its annuity income, which rose 27% over the six months and now makes up 93% of total revenue. Cartrack says it has strong predictable future annuity revenue as 73% of its subscriber base joined Cartrack in the past 36 months.

For the period, it reported a 21.6% increase in total revenue to R766 million. Earnings per share (EPS) increased by 245 to 57.9c, while headline EPS rose 25% to 57.8c. Its operating profit margin improved to 34% from 32% and its EBITDA margin rose to 50% from 47%.

The group says its first-half results aren't strictly comparable with last year as it has now adopted new accounting standards that treat cash sales the same as rental sales. However, it says the new standards better align its reporting to that of its competitors and will allow for better year-on-year comparisons in the future.

It says its SA business will deliver stronger bottom-line results in the next 18 months as it upgrades its platform which will result in more efficiencies.

Outside of South Africa, its subscriber base in the rest of Africa declined by 2%, which annuity revenue increased by 7%, largely due to the weaker rand. At constant exchange rates, it said revenue would have been flat. Its European segment grew subscribers by 23% following investment in distribution and operating capacity over the past two years. Annuity revenue from Europe jumped 28% to R67.3 million.

Asia Pacific, which is now Cartrack's second-biggest segment based on revenue contrition, grew annuity revenue by 54% to R71.7 million as its subscriber base expanded by 43%. In the US, where investment to date has been largely in research and development, it reported annuity revenue of R2 million from 1 400 subscribers. However, it says it is positioned to roll out in the US in the future.

As the demand for telematics data continues to increase, there will be lucrative growth opportunities to market across all channels and in each operating region," Cartrack said. "As such, opportunities to develop further vertically aligned revenue streams remain at the forefront of Cartrack management's short and medium-term strategy."

The company's shares rose 3.6% to R14.49 yesterday.

Cartrack looks good. Like the concept and they seem on top of technology and could do very well in USA as competition has very old tech. Earnings up nicely. Big capital expenditure and need new loan but underlying business very cash flow generative

-- Wayne McCurrie (@WayneMcCurrie) October 31, 2018