MiX Telematics CEO Stefan Joselowitz believes the company's stock is "significantly undervalued".
"I say that not based on an absolute share price, but our valuation is trading at a significant discount to most of our global peers in the space," Joselowitz told ITWeb in an interview.
The global provider of fleet and mobile asset management solutions' shares are publicly traded on the Johannesburg Stock Exchange (JSE), while MiX Telematics American Depositary Shares are listed on the New York Stock Exchange (NYSE).
The stock on the JSE was this morning trading at R4.25, almost 73% higher than a year ago, according to data compiled by Bloomberg. Year-to-date, the stock is already up almost 22% and over the past five years, the stock value has increased by over 160%. On a five-year view, MiX hit a record high of R6.50 in August 2013 after a previous low of R1.25 in March 2012. The company's market cap is currently worth around R2.6 billion.
"We have made progress; we have recently been trading at a 52-week high. We have done that through a combination of things. We are supremely confident in our stock; in this last year, we have used some of our cash to buy back 25% of our stock and we think that has been a great investment," he explains.
The stock on the NYSE has also tracked well in the medium-term, growing by almost 29% year-to-date and 113% over the past 12 months to trade at $7.98. The American Depositary Shares, which each represent 25 ordinary shares, began trading in New York in early August 2013 at around $16 a piece, but between then and now, the stock has dropped by a little over 50%.
"When we did the IPO in New York three-and-a-half years ago, it was incredibly successful. We were several times oversubscribed, and unfortunately, we trended downwards pretty quickly primarily off the fact that the rand started a three-year downward cycle - so that rattled a lot of the investors that bought into our stock and we had some early exits."
Joselowitz says the company is working on telling its story better but notes its story is perhaps marginally more complicated than some of its competitors that are single territory players and not global businesses.
"But we don't believe that justifies a deep discount; in fact, we think it is an advantage for investors because we are diversified by design, we have diversified geographies, diversified revenue streams, diversified currencies which give us a very nice risk management balance for an investor who is looking for a good growth stock over the medium- to long-term."
Founded in 1996, the group now operates in 120 countries and has offices in SA, the UK, US, Uganda, Brazil, Australia, Romania, Thailand and United Arab Emirates, as well as a network of more than 130 fleet partners worldwide.
Dual listing pain
Joselowitz does sometimes doubt whether it's worth being listed in both SA and the US but says: "It's our reality and it's not easy to unwind.
"If I could wave a magic wand and be listed on just one exchange, I probably would, but right now there is no plan on the table to do that. So we have got to put up with the pain and focus on unlocking the benefit which we haven't yet enjoyed."
He says one positive benefit was that MiX raised lot of cash through the US IPO. According to the group's results for the six months to 30 September 2013, this was R649.9 million ($65.5 million) in net proceeds from the IPO.
"What we don't currently have is a currency to scale up through acquisitions and that is what I'm working to achieve."
Joselowitz points out there have been a number of acquisitions of companies MiX's size or bigger in the telematics space in the US over the last 12 months. When asked if he would be open to a buyout or a merge, he said he remains open-minded.
"If the right thing comes along that is attractive, not only from a shareholder perspective but also is a good home for a business that has been my baby for 20 years ? if it's a good fit which helps us to achieve our objectives quicker, we will certainly entertain that. So we are open-minded but we are not actively pursuing it."
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