Altron has no current plans to list its vehicle tracking unit Netstar, but says it is looking to expand that business internationally in countries such as Malaysia and Australia.
The group’s shares leapt as much as 9% before paring gains later to end the day up 6% at R8.75, its biggest rise in a fortnight, as it reported growth in its continuing operations.
Altron, led by CEO Werner Kapp, is under pressure to grow its Netstar business after the unbundling of Bytes Technology. The unit, a once-dominant player in its sector, has lost ground to competitors such as MiX Telematics and Karooooo-owned Cartrack.
Netstar reported subscriber growth of 26%, with subscriber numbers rising to more than 1.5-million in the six months to August. Net customer additions almost doubled — up 91% to 187,273 in the period, Altron reported on Monday.
Even so, Netstar is trailing behind Karooooo which is gearing up to surpass 2-million customers in this financial year. Cartrack has 1.83-million subscribers.
To boost Netstar’s growth further, Altron’s management is looking at expanding its international presence.
“We’re fortunate to have a healthy balance sheet that we’re able to deploy into some of the organic growth initiatives and systems investments,” Kapp told investors during a presentation.
Like Karooooo — which has moved headquarters to Singapore — Altron sees Southeast Asia as the place to be for Netstar.
“We do have an appetite for international acquisition(s). We’ve specifically targeted places like Malaysia. Southeast Asia is a very attractive market, particularly in IoT and telematics...so we are actively pursuing opportunities at this point in time,” said Kapp.
Netstar MD Grant Fraser says Malaysia is an exciting market.
“Werner and I have spent a lot of time talking about it. We certainly believe that’s really where the next growth phase in telematics will come. And also, there are new opportunities for us in Australia. We will continue to grow our market share in both these regions.”
Netstar’s operations include Botswana, Ghana, Mozambique, Namibia, Swaziland and Zambia. Its global operations are in Malaysia and Australia.
Fraser — a former COO of MiX Telematics — was appointed MD on January 1 to implement a strategy to increase profit.
This comes as the group reported that Netstar has become a billion-rand business for the first time in a six-month period, with revenue growing 12% to R1bn and earnings before interest, tax, depreciation and amortisation growing 21% to R364m.
The company, worth R3.7bn on the JSE, has shifted its focus over the past few years, including selling ATM hardware and support business units in 2023 as part of a series of disposals to streamline operations, to growth areas such as the cloud, data analytics, the internet of things (IoT), and security.
Kapp dispelled speculation that Altron may be looking at listing its vehicle tracking unit.
“It’s not something we’re looking at, at this point in time. We’ve been quite clear about our strategy, where we want to take the business, making sure we’re a focused business now, and making sure that we execute on profit improvement strategies, continue to drive growth in some of our bigger engines: fintech, healthtech and the security business.”
“We look for opportunities to create value for shareholders at all time. At this point, we’re really looking to manage the business, maintain our market position, and continue to deliver results.”
Altron Group revenue increased 3% to R5.5bn for the period, while revenue from continuing operations was up 4% to R4.3bn, and up 11% excluding the ATM Business.
Altron recently concluded the sale of its ATM hardware and support business unit to NCR. It entered into an agreement to hive off the unit to NCR for a maximum of $10m in October 2022.
Ebitda from continuing operations increased 21% to R724m, and was up 26% excluding the ATM Business.
Cash generated from continuing operations grew 27% to R530m.
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