What: Australia's dominant car component catalogue provider Infomedia Limited (ASX: IFM) surprised the market last Friday with earnings, sales and cashflow that beat expectations. Having risen by nearly 50% since January before the earnings release, Infomedia shares surged another 10% on Friday and a further 2% on Monday to take the 2014 share price gain to over 68%.
So What: Infomedia Limited maintains and licences a global product catalogue of original equipment manufacturer (OEM) car components to dealer workshops. What that actually means is that Infomedia licences software that allows workshops owned by dealerships (think a Holden repair centre) to quickly and easily identify what parts are required, how much it will cost, and what the lead time is.
Infomedia's full year results to 30 June 2014 included a 17% rise in sales to $57 million, a 22% increase in net profit to $12.3 million and a solid 11% increase in cashflow to $12.5 million. The results represented a $0.3 million beat of previous guidance, but investors were most pleased to see growth from all of the group's operating segments and a 34% increase in the dividend payout.
What now: Infomedia is debt free, has over $11 million in the bank, and expects net profit to rise by 18% over the next 12 months to $14.5 million. Total subscription numbers are hitting new highs and I am particularly pleased to see that overseas revenue, from the Americas, Europe, the Middle East, and Africa rose an extremely healthy 22%.
Overseas revenue accounts for 75% of sales and is proving to be the real growth engine of the company. Additionally, due to the company's net cash position and strong organic growth, the dividend payout ratio can be exceptionally high at 94% of earnings. This translates to a trailing yield of 3.8%, 63% franked.
Having risen so strongly already, investors might feel as though they missed the boat (or car) on this one.
