by Sarah Turner.
Cabcharge is getting some attention from prominent members of the funds management community, with Geoff Wilson and Ben Griffiths both warming to the unloved stock.
The timing is fortuitous, with Cabcharge’s annual general meeting taking place on Thursday and the firm revealing an 11.6 per cent jump in revenue for the September quarter compared with a year ago.
Cabcharge, which will change its name to A2B, climbed 2.4 per cent to $2.16 on Thursday to bring price gains for its shares to almost 10 per cent in just over a week.
The stock remains well off its all-time high of $13.27, which it hit in May 2007, and continues to hover near all-time lows of $1.66.
But several influential investors believe there’s more upside ahead for the stock.
Wilson Asset Management chairman Geoff Wilson commented this week at the Future Generation Investment Forum in Sydney that “Cabcharge was going to be my Sohn pick. I’ve always liked it.”
Mr Wilson was referring to the 2018 Australian Sohn Hearts and Minds investment leaders conference where he instead presented Japanese mobile gaming company Bandai Namco while indicating that he went offshore with his choice due to his concerns over Labor’s franking credit proposals.
Cabcharge’s shares are currently undervalued and will re-rate once its technology investments start to drive stronger top-line growth, Mr Wilson said.
“Management has done a great job steadying the ship and now have the bandwidth to grow both organically and inorganically,” Mr Wilson told The Australian Financial Review.
“Cabcharge is also a very strategic asset for potential trade buyers in the long run if they can show that they can grow even with ride-sharing disrupting the taxi industry.”
The company has been through a tough period, falling from “darling” status in the early part of the 2000s into a “tailspin” in the latter part of the decade, Eley Griffiths co-founder Ben Griffiths said.
While the global financial crisis took place in 2007, there were company-specific factors at play as well.
“Cabcharge got caught up in somewhat of a downturn – a tailspin actually – with unfortunate asset purchases, changing regulation and technology,” he said. “For many, many years – almost 10 years – Cabcharge could not get out of its own way.”
But the firm’s chief executive, Andrew Skelton, has been ushering in a new era. “He hasn’t been there for that long but he is engineering a turnaround in Cabcharge that will take some time,” Mr Griffiths said.
That plan centres on divesting assets and investing in neglected areas of the business such as brand and technology. Mr Griffiths said that those changes will likely add up to a “big comeback” for Cabcharge, which is also trading with a valuation that is “not so bad”.
“So I’m saying Cabcharge is a turnaround story. It’s a beaten-down favourite from days gone by that below the surface is doing some great things and I think will be a great performer.”