MiX Telematics, the provider of fleet and mobile asset management solutions, has no immediate plans to seek out a single listing in the US.
Although listed on the JSE, MiX has grown into a global business with offices in SA, the UK, the US, Uganda, Brazil, Australia, Romania, Thailand and the United Arab Emirates.
MiX has American depositary shares listed on the New York Stock Exchange, but CEO Stefan Joselowitz was asked at Wednesday’s first-quarter briefing whether the company would move its domicile to the US.
Joselowitz said the company was a flyweight boxing in the heavyweight division when it came to compliance, its dual listing structure and operating in multiple currencies.
"If I had a magic wand, I would structure the business to have a single listing … potentially in the US. But there is no plan on the table with the board … this is not a simple exercise."
MiX was not excluding the possibility of a single US listing if an event drove the company in this direction, he stressed. "This might be driven by a merger and acquisition project. Who knows, we’ll wait and see."
US-based analysts seemed pleased with the first-quarter trading update, with references to "a great job on the margins" and "a great start to the year".
For the June quarter, MiX reported total revenue of R406m, up 7% from the corresponding quarter in 2016.
The operating margin was considerably fatter at 10.6% (from 6% in 2016) with Joselowitz reporting successes in strict cost management.
Diluted earnings per share came in at 6c (2016: 4c) prompting MiX to hike its quarterly dividend per share to 2.5c from 2c.
Encouragingly MiX raised its full financial year guidance for adjusted earnings before interest, tax, depreciation and amortisation (ebitda) to between R375m and R395m and adjusted earnings per share to between 19.7c and 21.8c.
Joselowitz was pleased with the solid start to the new financial year. "We enjoyed strong performance from our premium fleet portfolio globally, which resulted in a return to mid-teen subscription revenue growth on a constant currency basis."
He estimated that MiX’s full-year subscription revenue would grow to between R1.4bn and R1.42bn, which would mean a growth rate of between 13% and 14.6% on the year to end-March 2017.
Joselowitz reckoned total revenue would top R1.6bn – an increase of between 6% and 8% from the past financial year.
He contended that MiX had reached an "inflection point" with regard to margin accretion – adding that the company was moving out of a heavy investment cycle into a phase in which it would start enjoying returns on these investments.
"We are confident in our ability to execute our strategic initiatives to achieve our longer term targeted adjusted ebitda margin of 30% plus."
Asked about potential merger and acquisition activity, Joselowitz expressed reluctance to pay a 12 to 13 times earnings multiple for assets that were less attractive than MiX’s operations.
"There’s nothing clear and present … but we are still awash with organic growth opportunities," he said.
Reiterating his view that MiX’s stock was "significantly undervalued", Joselowitz believed the best use for the company’s capital was to repurchase its own shares.