It has been a tough 12 months for tech stocks, with the S&P/ASX All Technology Index (ASX: XTX) losing 35% as sharply higher interest rates take their toll on the sector.
Notable losers have been the Megaport Ltd (ASX: MP1) share price losing 71% over the past 12 months, and the Xero Limited (ASX: XRO) share price down 53%.
Although still sporting a negative return since this time last year, the RPM Global Holdings Ltd (ASX: RUL) share price has only fallen 12%.
RPM Global provides advisory consulting, technology and professional development solutions to the mining industry. Think of it as a "picks and shovel" play, a company seeking to benefit from the mining sector no matter which company or which mineral is "winning."
RPM Global shares had a strong October, its share price rising 25%. Late in the month, at its AGM, the company's stand-in Chairman confirmed it has started the 2023 financial year strongly, reconfirming its guidance for the full year of revenue of $101 million and EBITDA of $14.2 million.
The RPM Global share price trades at $1.88, giving the company a market capitalisation of $432 million.
Writing in its October monthly update, the Ellerston Australian Micro Cap Fund noted RPM Global's guidance was a significant increase on the prior year.
The fund believes RPM Global is well placed to benefit from the continued digitisation of mine sites and the increased penetration of its software across its key customers globally. It names global resource leaders such as Rio Tinto Limited (ASX: RIO) and BHP Group Ltd (ASX: BHP) amongst its diversified client base.
The Ellerston Australian Micro Cap Fund concluded…
"The group continues to be a stand-out in the technology sector, with a combination of strong top-line growth and operating leverage, as well as the announced buy-back underway."
Whilst not cheap, trading at over four times sales and over 30 times EBITDA, as a software business, RPM Global has strong recurring revenue and expanding profit margins.
In helping mining companies manage a mine site in the most optimal way over its expected useful life, the company offers a mission critical service. This should make it near impossible for its customers to give up, providing highly sticky recurring revenues for years to come.
