DTI kicking goals with 900 bus security contract

By Trevor Hoey. Published at Mar 21, 2019, in Trev's Stock Tips

The award of an important contract to DTI Group Ltd (ASX:DTI) was announced late in the day on Wednesday, and it appeared to be missed by the market.

DTI is a recognised supplier to the mass transit surveillance market, and yesterday’s announcement regarding the installation and supply of advanced CCTV recording systems for 900 buses being delivered to Western Australia over the next 10 years is an important development.

Not only is this a sizeable contract in terms of driving revenue growth, but it also provides earnings predictability with less reliance on lumpy one-off contracts.

The contract is also an endorsement of the group’s technology which has already been adopted by major government and corporate organisations focused on improving their security.

Increasing demand for identification enabling technology

The issue of security in public places has been very much to the forefront in the last week following the atrocities that occurred in Christchurch.

However, in terms of regularity of physical attacks and the like, public transport has really come under the spotlight.

Attacks on drivers and other commuters have become a regular occurrence, and more recently bus drivers highlighted serious health conditions they were experiencing as a result of commuters sniffing paint while in transit.

Identifying perpetrators is at the heart of addressing these problems, and the difficulty in finding the source of offensive behaviour was highlighted this week in relation to AFL star Tayla Harris who was denigrated by seemingly anonymous online trolls.

Michael Wilson/AFL Media

Technology targets multiple markets

While DTI’s technologies don’t play a part in internet security, it underlines the necessity for identification.

On this note, the company provides sophisticated surveillance systems, solutions and services to the mobile security industry worldwide.

DTI’s clients are transit agencies, transit operators, freight operators, law enforcement authorities and taxi organisations which utilise a range of professional products and services that encompass on-board recording equipment, fleet management systems, back-end mass storage and retrieval facilities and end-to-end managed services.

The rail sector is an important market for DTI, and the company currently has a tender pipeline with original equipment manufacturers of $213 million.

Reaping the rewards of past investment

Spending on research and development peaked at $7 million in 2017, with a combined expenditure of $10 million in the three years leading up to that point.

Management recently noted that R&D expenditure is now at an anticipated steady-state level of $2 million per year, marking a point where the company should transition to regular and growing profitability.

Importantly, the company isn’t solely reliant on winning new work as the proportion of income being generated from maintenance work has been growing steadily in recent years.

With a substantial uptick in revenues and three consecutive six-month periods of improving margins, this could well be the line in the sand where DTI experiences positive earnings related share price momentum.


Where to invest $1,000 right now

When the experts at Next Investors have a stock pick, it may pay to listen.

The Next Investors have been investing in ASX small cap stocks for years, with their best small cap picks yielding returns of 1,200%, 1,120%, 900% and 678%.

They have just revealed their hand-picked, FY2021 stock portfolio of high conviction long-term investments.

Click the link below to see what they are currently investing in.


SEE THE PORTFOLIO

tags

TECH

S3 Consortium Pty Ltd (CAR No.433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information only. Any advice is general advice only. Neither your personal objectives, financial situation nor needs have been taken into consideration. Accordingly you should consider how appropriate the advice (if any) is to those objectives, financial situation and needs, before acting on the advice.

Conflict of Interest Notice

S3 Consortium Pty Ltd does and seeks to do business with companies featured in its articles. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this article. Investors should consider this article as only a single factor in making any investment decision. The publishers of this article also wish to disclose that they may hold this stock in their portfolios and that any decision to purchase this stock should be done so after the purchaser has made their own inquires as to the validity of any information in this article.

Publishers Notice

The information contained in this article is current at the finalised date. The information contained in this article is based on sources reasonably considered to be reliable by S3 Consortium Pty Ltd, and available in the public domain. No “insider information” is ever sourced, disclosed or used by S3 Consortium.

Australian ASX Small Cap stocks | Why Finfeed.com is Australia’s leading small cap publication

Founded seven years ago, Finfeed.com is Australia’s leading and longest standing website for investor and finance news, education and expert opinion.

Published by StocksDigital, Finfeed was created to report daily on the comings and goings of ASX listed stocks in the small cap market.

As the first digital publication dedicated specifically to this space, Finfeed soon became the most trusted publication in the market, quickly garnering over two million page views – a number that continues to rise.

Finfeed.com provides its readers with informative articles that tackle the latest in market moving #ASX small cap news, plus exclusive content you won’t find anywhere else. It is aimed at those with an interest in investing, market education, company performance, start-ups and much more.

Finfeed.com is the only media organisation operating under the strength of a Financial Services License and is backed by leading journalists and analysts all with brands of their own.

The website aims to inform, educate and entertain with content that drills down into the heart of financial matters.

Finfeed is a leading source of investor and market information, with everything investors need to know about how to invest written in a way that anyone can understand. 

Over the years, the website has expanded beyond exclusively reporting on small caps, to profile Australia’s leading ASX listed small, mid and large caps as well as some of the country’s most successful CEOs and business leaders to find out what makes them tick.

Every day you will find fresh content covering:

Fast Facts

Over 4,000 articles published

Over 2.3 Million Page Views and counting

Over 10,000 followers on social media

Subscriber list growing by 2% monthly

Thanks for subscribing!

X