$AMTEL / 7031 (AMTEL HOLDINGS BERHAD) - Record High Yearly Performance, Launches new Product and Services Offering in Partnership with Zurich

Amtel ends the year with a record high performance in both revenues and profits. Cash flow generation is good, with TTM PE around ~11x, TTM FCF about 6x. The company trades below NTA (which had been climbing, currently standing at RM 0.75 with almost 0 debt). The QR itself had nothing much to unpack, so I'll quickly just go thorough that and highlight other more interesting news.

1. Profit is ~RM 1.7mil for the quarter, EPS of 1.76sen.

2. NOCF for the year stands at RM 12.5mil. FCF is around ~11.5mil. They had already completed their expansion to their new HQ at Wisma Amtel 2-3 years ago, so I don't expect any major capex in the near future. Nothing alarming in cash flow, business as usual.

3. They have launched their new product called Lokatag Pro-- I presume this was the one they delayed from last year-- in collaboration with Zurich insurance. I think the partnership is quite interesting, and moves them up the value chain from being a pure OEM part supplier to a service provider.

4. For better of worse, this new product is still using the T&G and NFC T&G cards. for the near future, I think it's still OK, but depending on the technology used for MLFF this could be a damper. That being said, the MLFF rollout using RFID seems to have hit a speedbump, and so for the meantime many will still be using their smart tags it seems.

Amtel made a few headlines in the newspapers recently with this new launch of their Lokatag Pro, so let's go through what Zurich had posted about them:

4. Zurich plans to offer personalised telematics insurance as well as automated motor insurance claims processes.

5. Telematics insurance is a new term to me, but basically it means that your driving will be tracked by the insurance company to provide more personalized offerings. Such as, instead of a flat fee, you could opt for cheaper rates if you don't drive as much or have a record of safe driving. Other things could be extracting data such as mileage, driving behaviour, automatic accident alerts, data logging, theft alert and recovery, and so on. Something like using big data for your cars/trucks. I understand telematics insurance isn't exactly new, with AXA offering it in 2019.

6. It could make insurance claims much easier and less disputable, as insurance industry has historically been a PITA to claim for.

7. In Zurich's article, they mentioned that the Lokatag Pro contains patented technologies and it's a first of its kind in the market. Mr Koid, the CEO of Amtel, said they are the first Smart Mobility Services Provider in the region. Those with more knowledge in the matter could chip their thoughts on these statements.

8. The Lokatag Pro incorporates both contactless toll payment technology as well as a dashcam and sensors for vehicle security including geotagging for evidentiary purposes.

9. Amtel aims to onboard 500k users within the next 3 years into their Loka ekosystem.

10. Interestingly, they are also partnering up with Stickiie which is a car ad-tech company. I presume it would be in the likes of offering targetted advertisements using PDOOH style based on the location of the car. Details are unclear at the moment.

11. The Lokatag Pro retails at a rather steep RM 1799. The price is quite high considering alternatives in the market (like getting your own smart tag + dashcam) could be as low as around RM 400-500 only. That being said, the features and design (all in one) could make up for it. Also, with proper promotions it could drive people to give it a try, as Zurich is offering free car insurance when you buy it. Something along the lines of a package when you buy a new car and get it fitted in nicely, together with insurance and so on..

And lastly, an interesting announcement from the company

12. Amtel is proposing to allow the Board to declare final dividends without needing to convene a General Meeting. Amtel had not been a dividend payer for the last decade, so this could be a sign that they want to resume paying out dividends again. It's timely, in my opinion, as they have good cash and cash generation ability and definitely can afford to pay out reasonable dividends, assuming a normalized EPS of around 6-7sen per year.


Zurich article here: https://cutt.ly/SwZRR9nU

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