CARMANAH TECHNOLOGIES CORP CMHXF

Q2: Strong Organic Growth with More Acquisitions to Come.

[93Darkhorse93]

All in another strong quarter delivered by management with 18% organic growth in its strategically important signals business with continued margin expansion with cost control and real impressive cash generation of 4.8M in the Q.
 
The nature of large projects revenue recognition can always be lumpy and looks like it was a trough Q for its Power division with revenue growth firing back up in that division in the back half of the year.  Initially had me a little worried when only the preliminary numbers were released but turned out to be nothing more than a timing issue.
 
It was great to hear a reaffirming management that has a clear plan in place going forward and a strategy for organic and acquisitive growth.  I believe we can expect additional acquisitions with the cash generative abilities of the company is demonstrating and based upon management commentary in the release.  These tuck in acquisitions could add 20M+ in annual revenue like the Sabik Gorup acquisition did and gives Carmanah a long runway for growth as they acquire additional revenue and take advantage of cross selling opportunities and deliver EPS and EBITDA growth.
 
Management has put their money where their mouth is and have demonstrated their ability to execute an acquisition strategy with the Sabik Group into a preexisting business without sacrificing organic growth. Paying 11x forward P/E with a PEG ratio of 0.40x I am willing to bet with them especially given the secular tailwinds of an environmentally conscious infrastructure spend.
 
LONG