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http://www.news.com.au/sundaymail/story/0,,20412959-3122,00.html


GPS company alters course

Anthony Marx
September 15, 2006 12:00am

PROSPECTS for once-struggling Brisbane company GPS Online have brightened considerably, with a name change and $3.3 million turn-around in its fortunes setting the scene for a forecast 440 per cent jump in pre-tax profit this year.

The company, which will now be known as Industrea, announced a pre-tax profit of $1.95 million yesterday. That was up from a $1.37 million loss the previous year.

The focus of the company has also broadened. Once limited to developing fleet and asset management using GPS-based tracking, it now keeps busy with mining products and services.

Chief executive Robin Levison forecast that pre-tax profit would reach $12.3 million this year.

The company has been on an acquisitions binge, buying Advanced Mining Technologies in December. A decision in June to purchase Wadam Industries will provide a valuable entry to the Chinese market, Mr Levison said.

The company also bought mining services company PJ Berriman.

No dividend was declared as GPS shares added 1.5¢ to finish at 15¢.

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GPO - GPS Online or now Industrea (name change)
Another interesting stock to watch out for is the heavily traded GPO which amongst other products offers GPS based location systems for major assets and are active in industries such as mining (China in particular), waste management and army related.

They made an announcement on the 27th July which indicated a takeover of WADAM would enable them a NPBT of some $1.6m for 2006 while importantly for 2007 a NPBT of $10.3m.

This has being revised upward to 20% because of an additional takeover which is earnings accretive given the price paid and will lift NPBT earnigs of some $12.3m NPBT. They have some $16m in net losses and if appropriate and could be applied, we are looking at a low amount of tax payable for 2007.

We like GPs because of the great value, scalable business (costs can be kept low while revenue upside is large). The two businesses which they have taken over will propel them into the Chinese market further as WADAM already does significant business with Chinese mining industry.

Additionally the other company (name escapes right now!), is also a leading distributor.

As well, the stock valuation is attractive, priced at 15cents, and assuming $12.3m earnings, we have a PE of some 7, assuming tax is paid and perhaps NPBt of $8.3m, than we have a PE of some 10.

Either way its all cheap, cheap and great value.

Shares outstanding is some 550m (after issuing shares to cover the takeover of the 2 companies aforementioned earlier). Pre the 2 takeover, shares outstanding is some 484m.

This should provide investors with attractive growth stock with great technology and upside potential given that dividend is also going to be payable, together with additional contracts which is likely given the increased networking and stronger product offering heading towards 2007.

That is some 1 and a half years before another contract puts a blower under this share price to lift it north once more.

Possible takeover target also given capitalisation is still under $100m.