Miton UK Microcap Trust plc (LON:MINI) Co-fund manager, Gervais Williams caught up with DirectorsTalk for an exclusive interview to discuss CyanConnode Holdings.
DirectorsTalk asked:
CyanConnode Holdings is one of your larger investments. We’ve seen a real increase in the pace of contracts that they’re signing in India for their smart metering technology and R&D efforts. In fact, they’re now the second fastest-growing UK company in India. Zeus’s revenue growth forecast are at an increase of 39% for year ‘24 and 111% for year ’25, you must be excited by their prospects?
Co-Fund Manager, Gervais Williams, commented:
Yes, I am, and I think it’s worth putting some context into this.
Companies like CyanConnode have been investing in India for 10 years, it’s already one of the larger companies in terms of supplying smart metering solutions, which have been expanded now under the Modi government, and there’s a lot of investment, and they’re tendering for a very large number of contracts.
Although those growth rates sound good, if anything, the opportunities for this company to have a step change in terms of orders. Now that hasn’t come through this year. If anything, those orders haven’t been appointed to anyone – no one’s won those orders yet; they’re all still out to be won. The company has raised a little bit of capital, which if anything, has held back its share price appreciation in the short term.
The nature of it is, after 10 years of investment, as companies start to mature, as they generate not just profit but cash generation, surplus cash, you can see share prices literally transformed.
We’ve seen that in a couple of examples already in the Miton accounts, such as Yu Group, which has already come through very strongly. As of today, we’ve had further trading statements from Journeo and Supreme plc where they’re generating a lot of cash.
As these companies move like CyanConnode from actually being cash consumptive to cash generative, you can see really very exciting periods of not just growth but particularly cash generation.
We’re tremendously upbeat about CyanConnode.
