Well what can I say. It has been a very disappointing few months for RDF shareholders.
The long term outlook still looks very good.
The biggest issues confronting the company have been a general slowdown in the awarding of contracts. (general market). This in part has been a result of a lot of negative press from the anti-red light lobby groups who have had some success in 1. Shutting down Virginia 2. Getting Ohio legislation at least part way
On the other hand Texas approved red light camera’s
Ultimately I think Ohio legislation will be unsuccessful but it will take time and cause further delays in Ohio. Virginia may also get resurrected in the future
On the positive side the company is growing revenues and profits very strongly but not quite as strongly as hoped for 6 months ago. Web searches have identified between 10 and 12 cities that have selected RDF but not yet signed contracts so the pipeline is strong. Unfortunately for the time being several of those are in Ohio.
Quite a few of the existing tenders are in cities and states that are looking at combined speed and red light which assuming RTS win their fair share can only be good for future revenue growth.
Also of significance is that competitors such as Transol and Nestor look to be in financial difficulties. Transol is clearly much worse than Nestor. I think Transol will disappear soon and Nestor will find it more difficult to compete as RDF highlight their financial weakness
Overall RDF is maintaining their dominance of the US market and as contract signing pick up through the end of this year and next we should see a significant share price recovery.
Long term the current prices look very attractive buying but as always that is no guarantee that short term the price cannot dip lower.
I am certainly holding at this time
Ps – I forgot to mention that the comms business has been awarded contracts in value of over 50M in the last few months. Given this business unit has had annual revenues of around 7M in the last year this will provide a big boost to revenue short term and also profits from the comms division
RDF Price at posting:
0.0¢ Sentiment: LT Buy Disclosure: Held
