RE:RE:RE:RE:iGPS, RM2, other
Agree with many of your comments.
My understanding is that Loblaws is a tough client logistically to service as most of the business is east-west, ok in ON, BUT, you may still have to service coast to coast, so the logistics c/b hard and expensive; Axios focused on regional growth in USA.
RM2 has spent about USD185MM, with $15MM in pallet inventory, of which $5MM is finished product (unbelievable)...
The recent Axios raise will get them through to break even on an operating basis, then the question is how fast do they grow and what form of capital can they access to fund growth.
My rough numbers are the current raise should take them to about 200,000 pallets, the revenue is about USD20MM, USD10MM of EBITDA and if you appy the Brambles multiple thats a worth about USD100MM, about CDN130MM or about a 4 bagger from current prices.
Key risks are logistics (Axios trying to stay regional v national like iGPS) and FX.
A wild card is the sensor technology, like most IOT tech, the host creates the value (think nest) and if the clients embrace the solution margins will be higher. RM2 states its pallets can accept RFID tech, but they do not appear to have taken any initiative on it.
RM2 has a GBP150MM value, or about $300MM CDN, with USD35MM in cash, revenue run rate of about USD3.5MM and a loss of USD25MM (they have spent about $185MM US so far). Axios can't compete on the invested capital or loss categories, but has a similar rev run rate.
If RM2's operating trend continues (it has been consistent so far) the trade is short RM2, long AXA, doubt you can short RM2 though....