We don’t usually get a whole lot of new information from Annual General Meetings (AGMs), but they are full of opportunities to get qualitative impressions about a business and, most importantly, the people who run it. So in that spirit, here are my notes on the AGMs of RPM Global and Data#3.
Data#3 AGM and Profit Guidance
Earlier today, Data#3 (ASX: DTL) provided H1 FY 2025 guidance of $31 million to $33 million net profit before tax. Based on last year’s tax rate of 30.2%, that implies net profit after tax of about $22.3 million, at the mid point. That would imply a growth profile something like this:
I had a question for one of the founding directors, Mark Esler, who was up for re-election. I wanted to know what he thought were the biggest risks and opportunities facing the business. However, when the Chairman asked for online questions, the moderator said that there was an online question but that “Mr Esler has sufficiently answered the question that was received.”
But my question had not been answered at all. Rather, Mr Esler had answered an entirely separate and different double-barrel question with minimal mention of risks and opportunities. Eventually, the moderator did ask my question, and I got a fairly interesting answer.
Mr Esler basically declined to talk much about risks but sounded rather empassioned when it came to opportunities. The key takeaway for me was the energy he had when talking about the opportunities as if it genuinely did excite him. It could simply be a performance, but it seemed genuine to me. It was good to see such freshness from an old hand on the board.
While I do remain a bit cautious, given Data#3 has seen recent transitions in the CEO, CFO, and Chairman, I still think the stock is a Buy after the 6% rise today. While growth is clearly slower now than in the past, the core elements of my long-term investment thesis remain in place.
The cherry on top was when the Investor Relations representatitve Steve Loxton called to apologise that my question was not asked when it should have been. I thought that was a nice touch and it moved me from wondering if my interaction with Mr Esler had been censured deliberately to believing that it was an innocent mistake that the company will likely not repeat.
RPM Global (ASX: RUL) AGM
Earlier this month RPM Global (ASX: RUL) held its annual general meeting. The key takeaway from Managing Director Richard Mathew’s speech was that RPM Global is finding success through global framework agreements with big mining companies. He said that these agreements are “an acknowledgment that we are a valued provider to these mining majors and that we can be trusted to deliver what we say we are going to deliver.”
On top of that Mathews was very optimistic about the XECUTE and Open Pit Design products. He said that he believes the calendar year 2025 will be the inflection year for the former because “some of the world’s largest miners are putting this product through its paces right now.” He described the response to the launch of the latter product as “nothing short of spectacular.”
Mathews also reconfirmed the FY 2025 guidance of “total revenue in the range of $120 million to $125 million, operating EBITDA in the range of $17.5 million to $19.5 million, and Profit Before Tax in the range of $12.5 million to $14.5 million.” Since RPM Global shouldn’t need to pay much tax in FY 2025, we can therefore, expect around $13m in net profit after tax.
At the current share price of $2.91, RPM Global has a market capitalisation of around $644 million, putting the stock on around 50x a reasonable estimate of FY 2025 earnings.
While this does imply an expectation of continued growth, Mathews commented that “so far in Financial Year 2025, we have signed GFAs with three of the world’s largest gold miners, all of which facilitate the ability for those customers to procure both Software and Advisory Services.” Therefore, I would argue that market optimism about continued growth should be well justified.
I would expect RPM Global to be a volatile stock given the high expectations in the share price, but the investment thesis remains on track.
Disclosure: The author of this article owns shares in DTL and RUL and will not trade DTL or RUL shares for at least 2 days following the publication of this article. This article is not intended to form the basis of an investment decision and is not a recommendation. Any statements that are advice under the law are general advice only. The author has not considered your investment objectives or personal situation. Any advice is authorised by Claude Walker (AR 1297632), Authorised Representative of Equity Story Pty Ltd (ABN 94 127 714 998) (AFSL 343937).
The information contained in this report is not intended as and shall not be understood or construed as personal financial product advice. You should consider whether the advice is suitable for you and your personal circumstances. Before you make any decision about whether to acquire a certain product, you should obtain and read the relevant product disclosure statement. Nothing in this report should be understood as a solicitation or recommendation to buy or sell any financial products. A Rich Life does not warrant or represent that the information, opinions or conclusions contained in this report are accurate, reliable, complete or current. Future results may materially vary from such opinions, forecasts, projections or forward looking statements. You should be aware that any references to past performance does not indicate or guarantee future performance.