Why Aerometrex shares have doubled their IPO price

Profitable with a good balance sheet and 30 year operating track record this looks a small cap to watch. 

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

There's still a lot of appetite for tech-based IPOs if the vertiginous rise of Aerometrex Ltd (ASX: AMX) shares is a guide.

The aerial mapping business issued 25 million new shares at $1 each for its IPO on December 9 with the stock doubling in value to $2 just one week later. 

Based on 94.4 million shares on issue Aerometrex is now valued by the market at $189 million, with it posting a net profit after tax of $2.57 million on sales of $16.1 million for the financial year ending June 30 2019. It also made an operating cash profit of $5.09 million to suggest it's quite rare as an already profitable new tech listing. 

Notably, most of its sales are currently achieved on a project basis where it maps the ground for enterprise clients using airborne lasers. Close to half its total revenue also originates from public sector clients that commonly demand the on demand aerial surveying projects. 

Notably, it's looking to build out its subscription or data-as-a-service offering to clients that would generate more recurring revenue potentially at very high gross profit margins. In this sense it's a potential competitor for Nearmap Ltd (ASX: NEA), but still a long way behind it. While Nearmap for example could also look to push into Aerometrex's mapping-on-demand space so competition is a two-way street. 

Overall though, it's not hard to see why Aerometrex's valuation surged last week given it's already profitable.

Moreover, it now has the cash on hand it needs to to invest in sales, marketing, product development and other sources of new client acquisition. 

It looks a small cap to watch. 

Motley Fool contributor Tom Richardson owns shares of Nearmap Ltd. The Motley Fool Australia owns shares of and has recommended Nearmap Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Market News

A neon sign says 'Top Ten'.
Share Gainers

Here are the top 10 ASX 200 shares today

Investors regained some confidence on the stock market today.

Read more »

A couple sit in front of a laptop reading ASX shares news articles and learning about ASX 200 bargain buys
Share Market News

ASX 200 lifts as RBA keeps interest rates steady

ASX 200 investors were buoyed by the RBA’s interest rate decision.

Read more »

A young women pumps her fists in excitement after seeing some good news on her laptop.
Share Gainers

Why Baby Bunting, Bellevue Gold, Cettire, and New Hope shares are rising today

These ASX shares are having a good session. But why are investors buying their shares?

Read more »

A young woman holds an open book over her head with a round mouthed expression as if to say oops as she looks at her computer screen in a home office setting with a plant on the desk and shelves of books in the background.
Share Fallers

Why Aussie Broadband, Liontown, Metals Acquisition, and Seek shares are falling

These ASX shares are having a poor session. But why?

Read more »

woman holding her baby and looking at her phone happy at the rising share price
Broker Notes

3 ASX All Ords shares that brokers tip will grow 30% to 40% this year

The experts say these three ASX All Ords stocks have great growth ahead of them.

Read more »

A man stands with his arms crossed in an X shape.
Mergers & Acquisitions

Boral share price falls after rejecting Seven Group takeover

The offer 'undervalues' Boral according to its committee.

Read more »

A businessman hugs his computer and smiles.
Opinions

3 Australian shares to buy and hold forever in your ASX portfolio

I think these three ASX shares can outlive us all.

Read more »

Smiling man with phone in wheelchair watching stocks and trends on computer
Share Market News

5 things to watch on the ASX 200 on Tuesday

A positive session is expected for the ASX 200 on Tuesday.

Read more »