@tle85,
I remain extremely bullish.
I find it bizarre to think anyone would sell at the current share price following the 5 year GM contract renewal because
the gap between the current share price and fair value has now widened. The GM deal provides an amazing platform for CXZ to grow from now across the next 5 years. The downside of an investment in CXZ at today's valuation ($12 million AUD) is now extremely minimal. CXZ is a massively asymmetric play now; major upside, minimal downside.
I am very happy with the GM contract renewal on favourable pricing terms and on a timeframe of 5 years (the original agreement flagged a 2-year extension). The company has been de-risked with this deal. This is made all the more impressive given that GM is historically notorious for squeezing suppliers on renewals, particularly in software where the supplier’s costs are sunk.
With this milestone now ticked off, Connexion has increased freedom to allocate internal resources towards growth, and CXZ is investing further. Most here who are doing due diligence will know about CXZ's hiring initiatives. This expanded team will naturally impact profitability in the near term but should prove highly worthwhile in the medium/long term. This has been flagged in the outlook section of the past two quarterlies, so hopefully, investors are factoring it into their forecasts and are expecting lower profitability in the short term because of this (and do not get spooked like was the case when the Half Year was released in Feb 2021 and investors weirdly panicked even though the results were merely the sum of the prior two quarters).
For the first time in the Company's history, CXZ staff are following and executing a clear strategy. Previous CEOs (prior to Aaryn) have not had the strategic foresight (and perhaps work ethic) to achieve this. We have to remember that Aaryn has only been in the CEO role since late last year. Since then he has meticulously gone about his business in an understated manor.
The usual caveats remain and there are challenges in this industry of course, including long lead times for OEM deals, but I am confident that the CXZ team who are go-getters, will be able to execute the strategy, cross-sell at the dealership level using the OEM agnostic product and sign another OEM eventually at the brand level. By this point, CXZ will have multi-bagged.
The only problem at this stage is the shareholder register. The register is full of many uninformed, impatient and emotional investors/traders/speculators who are not experienced, rational long-term investors. This is hurting the share price. Also, remarkably, many misconceptions remain about the company. Anyone who thinks Aaryn himself made the decision on behalf of Lucerne Investment Partners to liquidate the CXZ holding last year has not done their research.
But, in time this will change. Fortunately, 5% of the register changed hands on the day of the GM renewal, and we can only hope that the new shareholders are informed long term investors who understand the multi-bag potential on offer here and the enormous strategic potential that the 5-year GM extension presents for the company. I'm a top 30 holder and I will continue to sit on my hands and allow this story to play out until we arrive at a share price that I think is more reflective of fair value. In the short term, storytelling and sentiment are all-knowing, but in the long term, cash flows are what truly matters for the share price.
We should be trading at 2-3 cents by now based on GM cashflows alone and hopefully, we see appreciation to that level across the coming days/weeks. It doesn't make sense to be selling at this point, now that the company is de-risked, with a major deal locked in for the next 5 years.
This is not saying much, because the history of the company is littered with many scars, but CXZ is currently in the
strongest position it has ever been.
At 1.6 cents ($12 million EV), CXZ remains one of the most undervalued, growing, profitable, zero-debt, microcap stocks on the ASX.T.E.P.
@Keyhole,
@madamswer,
@Transversal
