{"id":557906,"date":"2024-08-30T11:01:18","date_gmt":"2024-08-30T09:01:18","guid":{"rendered":"https:\/\/mybroadband.co.za\/news\/?p=557906"},"modified":"2024-08-30T11:07:44","modified_gmt":"2024-08-30T09:07:44","slug":"south-african-founded-tech-company-making-waves-globally","status":"publish","type":"post","link":"https:\/\/mybroadband.co.za\/news\/enterprise\/557906-south-african-founded-tech-company-making-waves-globally.html","title":{"rendered":"South African-founded tech company making waves globally"},"content":{"rendered":"\n

Karooooo is one of the best-performing technology companies on the Johannesburg Stock Exchange (JSE), with its share price increasing by 46% over the last year.<\/p>\n\n\n\n

The company’s share price performance was driven by Karooooo’s steady revenue and earnings growth and its successful global expansion.<\/p>\n\n\n\n

Karooooo is headquartered in Singapore and is best known for its Cartrack software-as-a-service platform, which provides real-time data analytics and business intelligence.<\/p>\n\n\n\n

Although the company is based in Singapore, it has its roots in South Africa, which remains a core part of its operations.<\/p>\n\n\n\n

Zak Calisto, the founder and CEO of Karooooo, started Cartrack as a joint venture with Netstar in South Africa in 2001.<\/p>\n\n\n\n

Before he started Cartrack, he worked at Cell Communications from 1994 to 1996 and Vehicle Tracking Services from 1994 to 2001.<\/p>\n\n\n\n

This experience positioned him perfectly to start a company in the vehicle tracking space, combining the best technologies available at the time.<\/p>\n\n\n\n

Cartrack separated from Netstar in 2004, and under Calisto’s guidance, it became a powerhouse in tracking, data analytics, and business intelligence in South Africa.<\/p>\n\n\n\n

In April 2021, Calisto delisted Cartrack from the JSE and listed Karooooo, which wholly owns Cartrack, on the Nasdaq, with a secondary listing on the JSE.<\/p>\n\n\n\n

He explained that they decided to list on the Nasdaq because it offered them a long-term financial platform to service an international company.<\/p>\n\n\n\n

“We thought it was important to go to the Nasdaq but also remain inward listening into the JSE, allowing South African shareholders to continue participating in our vision,” said Calisto.<\/p>\n\n\n\n

Although Karooooo’s share price did not initially do particularly well, it gained momentum over the last year.<\/p>\n\n\n\n

The share price increased 46% over the last twelve months and 42% year-to-date. This makes it one of the best-performing shares on the JSE.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

Karooooo’s operational performance<\/strong><\/h2>\n\n\n\n

Karooooo delivered exceptional performance and is one of the few South African companies that have successfully expanded internationally.<\/p>\n\n\n\n

It has a presence worldwide, including South Africa, the Rest of Africa, the Asia Pacific, the Middle East, the United States, and Europe.<\/p>\n\n\n\n

All operating regions have delivered strong double-digit subscriber growth rates, with particular momentum delivered from Asia Pacific, the Middle East, and the United States.<\/p>\n\n\n\n

Karooooo increased its global subscriber base from 1.37 million to 2.05 million between 2021 and 2024.<\/p>\n\n\n\n

Region<\/strong><\/td>Average Annual Subscriber Growth<\/strong><\/td><\/tr>
South Africa<\/td>13%<\/td><\/tr>
Asia Pacific, Middle East, United States<\/td>25%<\/td><\/tr>
Europe<\/td>15%<\/td><\/tr>
Rest of Africa<\/td>10%<\/td><\/tr><\/tbody><\/table><\/div><\/figure>\n\n\n\n
\"\"<\/figure>\n\n\n\n

Revenue and Profit<\/strong><\/h2>\n\n\n\n

Karooooo’s subscriber growth translated into strong revenue growth. Group revenue grew by an average annual rate of 24% over the last three years.<\/p>\n\n\n\n

Its two main operating segments are Cartrack and Karooooo Logistics. Both segments delivered good revenue growth and, more importantly, were operationally profitable.<\/p>\n\n\n\n

The company’s latest quarterly report showed that Cartrack reported quarterly operating profits of R287.2 million and Karooooo Logistics R13.4 million.<\/p>\n\n\n\n

Karooooo Logistics was formed after Karooooo bought a 70.1% stake in Picup for R70 million in 2021 and rebranded the company.<\/p>\n\n\n\n

Since the acquisition, it took Karooooo 12 months to transform the segment from an operational loss-making company to one that delivered operating profits.<\/p>\n\n\n\n

In the past year, Karooooo Logistics reported operating profits of R35 million, meaning, at this rate, the acquisition has been a big success.<\/p>\n\n\n\n

The group’s profitability has increased strongly, with an average annual quarterly net income growth of 31% since July 2021.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

Cost Management<\/strong><\/h2>\n\n\n\n

Cost management plays an important role within an organisation, and Karooooo has done an impressive job in this department.<\/p>\n\n\n\n

As businesses grow, investors want to see economies of scale reducing proportional costs. It is fruitless for a company to increase its revenues while losing control of the costs.<\/p>\n\n\n\n

Karooooo has managed its costs well, which has allowed the company to translate its revenue growth into attractive profits.<\/p>\n\n\n\n

While its cost of goods sold (COGS) increased from 29% of revenue in June 2021 to 31% of revenue in June 2024, its operating expenses, finance costs and taxes have done the opposite.<\/p>\n\n\n\n

Over the same period, Karooooo has lowered its operating expenditure (OPEX) from 44% of revenue to 41%.<\/p>\n\n\n\n

Similarly, it lowered its Finance costs and taxes from 13% to only 7%. The combination of these events had a net positive impact on the group’s net profit margin.<\/p>\n\n\n\n

Karooooo’s net profit margin increased from 14% to 20%, which is exactly what investors would like to see from a company.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

Financial health and valuation<\/strong><\/h2>\n\n\n\n

Karooooo has a healthy balance sheet. The group’s debt ratio was lowered from 56% in 2021 to 31% in 2024, meaning that only 31% of the group’s assets are financed with liabilities.<\/p>\n\n\n\n

When considering Karooooo’s liquidity and ability to pay off its short-term obligations, it also points to significant improvements.<\/p>\n\n\n\n

Karooooo’s current ratio improved from 1.15 in 2021 to 1.52 in 2024. This means the company can cover its short-term liabilities 1.52 times with only its short-term assets.<\/p>\n\n\n\n

An even more impressive metric is Karooooo’s cash ratio, which increased from 0.16 in 2021 to 0.94 three years later.<\/p>\n\n\n\n

That means Karooooo can cover 94% of its short-term liabilities with just cash and cash equivalents.<\/p>\n\n\n\n

The low leverage and high liquidity paint a picture of a company with low levels of credit risk and no high debt costs.<\/p>\n\n\n\n

Karooooo’s valuation ratios show that investors have gained trust in the company to continue its strong performance.<\/p>\n\n\n\n

Its price-to-sales (P\/S) ratio is currently at 4.65, at the top end of its historical averages. Since Karooooo was listed, its average PS ratio was 4.20.<\/p>\n\n\n\n

Karooooo’s price-to-book (P\/B) ratio is currently at 6.39, which is very close to its total average of 6.52.<\/p>\n\n\n\n

Its price-to-earnings (P\/E) ratio is currently at 24.9 times, which is lower than its total average of 26.08.<\/p>\n\n\n\n

Its highest average P\/E ratio was in 2021 when it had an average of 32.9, and its lowest average was in 2023 at 22.44.<\/p>\n\n\n\n

Karooooo’s P\/E ratio is the most attractive metric of all its valuation ratios. This is mainly due to its cost management strategies, which result in greater profits.<\/p>\n\n\n\n

Overall, Karooooo is not significantly over or undervalued based on its historical averages. It presents itself to be fairly valued.<\/p>\n\n\n\n

However, in absolute terms, it has a high valuation. This can be explained by its strong revenue and earnings growth.<\/p>\n\n\n\n

 Date<\/strong><\/td>P\/E Ratio<\/strong><\/td>P\/B Ratio<\/strong><\/td>P\/S Ratio<\/strong><\/td><\/tr>
Average Total<\/strong><\/td>26.08<\/strong><\/td>6.52<\/strong><\/td>4.20<\/strong><\/td><\/tr>
2021<\/td>32.86<\/td>9.54<\/td>4.62<\/td><\/tr>
2022<\/td>27.33<\/td>6.13<\/td>4.55<\/td><\/tr>
2023<\/td>22.50<\/td>5.37<\/td>3.70<\/td><\/tr>
2024<\/td>22.44<\/td>5.65<\/td>4.00<\/td><\/tr>
Current<\/strong><\/td>24.87<\/strong><\/td>6.39<\/strong><\/td>4.65<\/strong><\/td><\/tr><\/tbody><\/table><\/div><\/figure>\n","protected":false},"excerpt":{"rendered":"

Karooooo, which started as Cartrack in South Africa in 2001, is rapidly expanding its operations globally. It is a favourite among local investors, for good reason.<\/p>\n","protected":false},"author":341111,"featured_media":557913,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[57364],"tags":[66088,69535,69533],"class_list":["post-557906","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-enterprise","tag-cartrack","tag-karooooo","tag-zak-calisto"],"_links":{"self":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/557906"}],"collection":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/users\/341111"}],"replies":[{"embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/comments?post=557906"}],"version-history":[{"count":3,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/557906\/revisions"}],"predecessor-version":[{"id":558028,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/557906\/revisions\/558028"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/media\/557913"}],"wp:attachment":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/media?parent=557906"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/categories?post=557906"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/tags?post=557906"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}