I am longterm holder in CCA, have some dialog with the company, and watch this threadfrom time to time. This is my first post. Work with me over a few points I think are important at this time.
- Recentcommunication has been average, the last quarterly was confusing andvague. This feedback has been made clear to the company fromexisting and exiting shareholders. In the absence of a good narrative the impressive numbers in the recent quarterly fell on deaf ears. I think we will see much better IR in the coming months.
- AlistairWilkie at this stage seems to be doing an outstanding job driving the business.Migrating clients, staff and systems across to a new company, successfully, inthe middle of a pandemic, whilst winning 4 new customers in three differentcountries is a huge feat. The administration behind the integration is notsexy stuff, the market doesn’t seem to value it, but its absolutelynecessary to laying a solid base on which to build profitable business.So far so good from the CEO.
- There is a base ofrevenue driving out positive EBITDA, this is significant. While itremains unclear exactly what future revenue will look like, there are roughly75 smart, incentivised, industry experienced people across the world workingfull time to make sure it grows. Essentially that is what the bet is on, canthey deliver..? They have thus far.
- The market:while there are big players with an established share, this isn't a winner takes all market, even a small market share is very valuable. Our nextcompetitors, EML (1.4bn) and Marqueta (10bn) in Aus and US respectivelyare relatively new companies who grew quickly by pulling customers from olderstyle incumbents and partnering with new growth businesses. Absolutely noreason why CCA cant do that again. There is a huge addressable market, and CCAnow has the same, in some cases better offering as its competitors. (Side note: its appears Marqueta and Galileo (bought by So-Fi) are both letting goof “small” 1m to 250k pa clients)
- The tech platformsthat CCA are now integrating are complex. Condensing the companiestech value proposition into a simple story I think is their biggestchallenge, one they haven't mastered yet. As I understand it, they have a bankingas a service tech stack, a US processor and global payments platform comprising their value suite. With this offering anyone from a small fintech to a state bank is a potential customer. With finite bandwidth and capital, picking the right companies to work with iscrucial. They are aware of this, and allocating resources accordingly.
- Over the last 18 months thecompany has appreciated in real value immensely, while the market cap hasn’t.This is perhaps a combination of the thin communication and the marketpresenting plenty of attractive alternatives for the punters capital, (EV boometc). This isn’t a quick buck stock. It looks to be areal value stock though, revenue is sticky (all Wirecards customerswill have stuck through a receivership and subsequent acquisition), there areimmense barriers to entry, existing customers are happy and engaging CCA to domore work, potential customers are approaching CCA for solutions, the techoffering is modern and market leading and the team are delivering.
At current MC CCA is trading at roughly 2x earnings....
I’m greedy.
DYOR as they say.
