Cordel Group (LSE: CRDL)

Last close As at 20/06/2024

GBP0.05

0.00 (0.00%)

Market capitalisation

GBP10m

Cordel Group offers a patented cloud-based platform for master data management and business analytics, together with specialist hardware and software for capturing, analysing and reporting on large datasets within the transport sector, employing sophisticated AI algorithms.

Equity Proposition

Cordel Group (AIM: CRDL) is a UK-listed, international technology company that applies machine learning (AI) to substantial data sets captured along rail corridors, automating mandatory inspections. Creating safer, more efficient and sustainable railroads around the world is core to the company’s mission. Cordel provides an end-to-end service, from data capture and management to automated rail corridor analysis, generating meaningful insights for its customers, including rail clearance, vegetation, ballast profiling, geometry analysis and so on.

There are five key reasons why Cordel represents an exciting investment case.

  • First, Cordel has won substantial, multi-year contracts with major railroads and rolling stock companies globally, including Amtrak, Network Rail, ARTC and Angel Trains, demonstrating a strong market fit. With a strong pipeline, management is hoping to double the company’s customer base over the next 12 months.
  • Second, once embedded within an organisation, the group becomes a data management beachhead, enabling stickiness and unlocking up- and cross-sell opportunities by leveraging data it has already processed. The sale of one additional use case can potentially double the value of a contract, alongside efficient and low cost delivery.
  • Third, with considerable investment in sales and delivery now complete, Cordel is well-positioned for operationally geared growth, especially in the substantial target North American market where the company has seen significant pipeline expansion. The company’s established partner network should support more global growth.
  • Fourth, globally, infrastructure digitalisation and spatial computing trends present significant market opportunities as sensor proliferation expands collectible data volumes. Cordel’s automated solution helps railroads derive value from data that might otherwise be siloed and unusable. Substantial government funding and initiatives in the group’s key markets are also driving customer adoption.
  • Finally, at 1.3x FY24 EV/sales, the valuation overlooks the expansion potential with the company’s top tier clients, as well as the potential to double its customer base in a short timeframe by executing on the current pipeline. Key re-rating catalysts are proving additional use case demand, upselling contracts and winning new clients, especially in the US. Cordel has a £10m mid-term recurring revenue target, where delivering this with the current cost structure would provide strong validation for the current strategy.

Cordel offers a compelling railroad solution, as shown by its impressive client base of major railroads worldwide. With an established footprint among existing customers and a growing pipeline of new customers, Cordel is well-positioned for rapid top-line growth and margin expansion.

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Sector

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Equity Analyst

Dan Ridsdale

Head of Technology

Key Management

  • Ian Buddery

    Chairman

  • John Davis

    CEO

  • Thouraya Walker

    CFO

Balance Sheet

Forecast net cash (£m)

0.6

Forecast gearing ratio (%)

N/A

Share Price Performance

Price Performance
% 1M 3M 12M
Actual 1.1 24.7 (27.2)
Relative 3.6 17.7 (32.7)
52 week high/low 6.6p/3.2p

Financials

Cordel’s new customer win in the Middle East expands its global customer footprint, providing further validation of the company’s product market fit and long-term revenue opportunity. Meanwhile, the company’s most recent certification from Network Rail means that Cordel’s entire processing pipeline now meets some of the most stringent standards globally, providing an important validation of the company’s product set.

Y/E Jun Revenue (£m) EBITDA (£m) PBT (£m) EPS (fd) (p) P/E (x) P/CF (x)
2022A 2.3 (1.0) (1.1) (0.67) N/A N/A
2023A 3.0 (0.3) (0.4) (0.20) N/A N/A
2024E 4.7 (0.6) (0.8) (0.39) N/A N/A
2025E 7.0 0.2 0.0 0.01 455.0 75.3

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