Our opinion on the current state of KRO

Cartrack was folded into a new international listing under the name Karoo (KRO) on 21st April 2021. It operates a vehicle recovery, insurance, telematics, and fleet management company operating in twenty-four countries around the world. It has a 92% recovery rate, which it claims is the best in the industry. It has very rapid organic growth, having grown its subscriber base by 21% compound over the past six years. Approximately 96% of the company's turnover is annuity income. The founder, Zak Calisto, owns 68,5% of the Singapore firm called "Karooooo". Given its rapidly growing annuity income and its rand-hedge character, we regard this share as an ideal investment for private investors. It is attracting strong institutional interest. The company has almost no working capital and its annuity income ensures that its overheads are already covered before it opens its doors at the beginning of each month. We suggest that you accumulate this share on any weakness. On 7th December 2020, the company announced that it would list the company on the NASDAQ with an inward listing on the JSE. This enables the company to raise funds on the international market. In its results for the six months to 31st August 2023 the company reported second quarter Cartrack subscribers rose 15% to 1,832m and total revenue increased by 21% with subscription revenue up 17%. Earnings per share (EPS) rose to 561c from 493c in the previous period. The company said, "Despite our strong investment for growth, Cartrack delivered a record operating profit of ZAR252 million, up 13%, in Q2 2024 (Q2 2023: ZAR224 million). Gross profit margin was steady at 71% (Q2 2023: 73%), with an operating profit margin of 29% (Q2 2023: 30%)." On a P:E of 21,41, this share is not cheap, but it has an amazing growth track record and it is a rand hedge. We continue to regard this as a "must have" investment for private investors.