15.01.2025
This £48m-capitalised group is a leading provider of information systems and technical services to transport operators and local authorities.
Yesterday Journeo (LON:JNEO) issued a positive Trading Update for the year to end-December 2024, while also guiding that the current year now underway could prove to be better than market expectations.
That is good news for this column’s readers who have invested in the group’s equity since my two previous Target Price setting Profiles – up 308% and 199% respectively.
The Business
The Ashby-de-la-Zouch based Journeo is a leading Intelligent Transport Systems provider, delivering solutions in towns, cities, airports, and the public transport networks that connect them.
The Company works extensively with local and combined authorities, Network Rail and many of the largest multinational transport operators, supporting them as systems converge towards a more efficient and sustainable future.
The business has five operating segments:
· Fleet Systems: CCTV video surveillance to improve passenger & driver safety, telematics for vehicle and driver performance monitoring, real-time communications for remote condition monitoring and automatic passenger counting.
· Passenger Systems: design, manufacture, installation, and management of hardware and software for electronic public transport information systems, in and around towns, cities, ferry terminals and airports which includes smart-ticketing and wayfinding.
· Infotec: design, advanced manufacture, installation and software management of information displays hardware for rail applications in stations, on-platform and on-vehicle.
· Journeo AS (based in Aarhus, Denmark): full-service provider of Intelligent Transport Systems ("ITS") with customers in Denmark, Sweden and Iceland.
· Journeo AB (based in Stockholm, Sweden): technical services provider to public transport customers in Sweden.
In the last 4 years, the company has invested over £6m in research and development, enabling it to design and supply powerful innovative solutions for customers' complex requirements and the demands of modern public transport.
With an ‘Internet of Things’ approach and open standards, together with field-proven and reliable engineering, Journeo is able to offer flexible, scalable products and services that can integrate with existing technology while preparing for future advancements.
Trading Update For 2024
Yesterday the group stated that it expects to report revenues for FY2024 of £50m (2023: £46m), in line with market expectations and adjusted profit before tax of £5.0m (2023: £4.0m), slightly ahead of market expectations.
It reported that it has continued to see strong momentum in both its Fleet Systems and Passenger Systems segments, while Infotec and MultiQ, which were both acquired in 2023, have also continued to perform well since joining the group.
On the basis of recent trading and strong order intake, the group is continuing to perform ahead of management's expectations and FY2025 is viewed with confidence.
The group’s Management expects that the FY2025 adjusted PBT will be slightly ahead of market expectations even after accounting for the taxation changes in the 2024 Autumn budget.
Management Comment
CEO Russ Singleton stated that:
"We are pleased with another strong Group performance in FY2024.
Our strategy of working closely with our customers to develop class-leading products, software and services to help encourage the use of public transport while reducing emissions and traffic congestion, continues to drive our growth.”
Brokers Views
Analyst Andrew Renton at Cavendish Capital Markets has a positive rating out on the group’s shares, looking for 470p as his Price Objective.
After yesterday’s Trading Update, he increased his estimates for both the end-December 2024 and 2025 years by about 5%.
He is now looking for the 2024 year to report £50.0m revenues against £46.1m in 2023, while increasing adjusted pre-tax profits £5.0m (£4.0m), with earnings of 24.7p (19.8p) per share.
For 2026 he goes for £52.0m revenues, £5.2m profits, and 24.9p per share in earnings – which I would guess is taking a cautious view.
My View
This little company has been an excellent performer for Master Investor readers.
The group’s shares, which hit 320p in late August last year, are now just 291.50p.
However, I consider that analyst Andrew Renton’s Target Price of 470p a share could well become a reality within the next year or so.
(Profile 07.04.21 @ 95.50p set a Target Price of 120p*)
(Profile 24.03.23 @ 147.50p set a Target Price of 175p*)
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