IIR Initiates Coverage: 4.7c price target (DCF base case)

Independent Investment Research, “IIR”, an independent investment research house based in Australia and the United States, has initiated coverage on CXZ with a 4.7c DCF valuation.

"Our base case scenario for the Company provides a price target of $0.047 per share. This represents a 213.3% upside to the share price at 27 January 2021. The valuation is based on a DCF model over a five-year period."

"The Bullish Case expands on the Base Case and assumes the company expands its product offering to non-CTP vehicles through lot management for the GM dealership network. The bullish case derives a valuation of $0.066 per share."

"The Bearish Case assumes the status quo for the company. This case assumes the renewal of the GM contract under the same terms as the current contract with no other CTP contracts secured nor expansion into non-CTP vehicles. Under the bearish case our model assigns a value of $0.024 per share"



"CXZ is trading at very low multiples compared to the median of the peer group. As at 27 January 2021, CXZ was trading at a P/E multiple of 4.1x, well below the median of 68.4x. From an EV/EBITDA perspective, CXZ was trading at 4.2x compared to the peer group median of 28.9x. We view the market to be valuing CXZ at a discount due to the single major customer risk and the upcoming renewal of its major contract. We expect the market to rerate the company in the event the contract is renewed."

You can view the report here, I highly encourage investors to have a read, it is a very detailed report and well balanced with consideration of the risks involved and a deep dive into the competitive landscape and the future of the telematics industry: https://connexionltd.com/wp-content/uploads/2021/02/CXZ_Inititation-of-Coverage_February-2021_Final.pdf

Lastly, those with their ears to the ground (thank you @Gmatt949) will know that Connexion will soon host both a shareholder only webinar and an institutional roadshow for those interested in a closer look at the business...

Anything under 2.4c is a bargain in my opinion given the very high likelihood of GM contract renewal. I'm glad I've been backing up the truck at these levels... the next chapter of this story is starting to get very interesting...

If the team executes, which I have every confidence they will, particularly with the newly strengthened team, the current share price will soon look like ancient history.

T.E.P.