The pressures associated with managing its uber-complex supply chain are immense. Having to not only balance real-time ‘demand forecasts’ against detailed raw material, production and finished goods requirements. But also hit tough cost, working capital & profit targets, alongside delivering just-in-time orders to supermarkets, convenience stores, wholesalers, consumers & alike.
Consequently, these type of business are usually forced to hold buffer stock in order to smooth out any logistical problems, whilst further suffering product wastage, reflecting inefficiencies, customer returns, obsolescence and damages. So what can be done?
The good news is that by deploying Rosslyn’s big data, analytics and AI software platform (RAPid), large corporates can now generate multi-£ms savings. Perhaps even shaving 1 week off working capital levels, improving yields by 1% and/or reducing procurement costs by another 5%. Thus paying for the software several times over, and in double-quick fashion too.
Hardly surprisingly therefore, that RDT is knocking the ball out the park in terms of contract wins. It signed a raft of blue chip clients in H1’19 - and today announced another 3, worth £500k in total, operating in the International Logistics, Healthcare and Pharma sectors. In turn, pushing annualised recurring revenues to >£6m (vs £5.05m vs 31st Oct’18), and putting the firm within touching distance of becoming cashflow positive.
Although our FY19 estimates and 12.5p/share valuation remain unchanged, we nevertheless note that the contracts bolster RDT’s P&L cover for this year and next. Namely, FY19 turnover and EBITDA of £7,500k (Act H1 £3,532k vs Est H2 £3,968k) and £242k (Act H1 -£290k vs Est H2 £532k) respectively, generating a +3.2% margin, and rising to £8,250k and £812k (9.8% margin) in FY20. What’s more, the stock at 7.3p trades on a frugal 2.0x CY EV/turnover multiple, representing a substantial discount to Big Data peers at 8.4x
