TPL Trakker (Private) Limited (PSX: TPLT) was incorporated in Pakistan in December 2016 as a private limited company. Previously it was known as TPL Vehicle Tracking (Private) Limited. The company is a subsidiary of TPL Corporation Limited while TPL Holdings (Prviate) Limited is the parent company of TPLT. The company is engaged in the installation and sales of vehicle tracking devices along with fleet management services. The company also provides Internet of things (IoT) solutions to a wide range of industries. Some of the services offered by TPLT includes cold chain monitoring, fuel monitoring, Genset monitoring, Driver Behavior monitoring etc.

Pattern of Shareholding

As of June 30, 2023, TPLT has a total of 187.263 million shares outstanding which are held by 1123 shareholders.Associated companies hold 64.8 percent shares of the company followed by Modarba and Mutual funds having 14.08 percent stake in TPLT. Local general public accounts for 6.59 percent shares of the company while foreign public hold 2.60 percent shares. The remaining shares are held by other categories of shareholders.

Historical Performance (2020-23)

The topline of TPLT has been growing in all the years under consideration except for a dip in 2020. That was the year when the company not only witnessed a drop in revenue but also posted a negative bottomline. In 2021, TPLT posted the highest revenue growth among all the years under consideration, yet bottomline stayed in the negative zone, however, the magnitude of losses receded. 2022 appears to be a blissful year for TPLT as it was able to post net profit after two successive years of losses. In the following year, the topline continued to march up; however, the company couldn’t sustain its bottomline in the positive territory. The margins of the company hit the rock bottom in 2020 and then started showing signs of recovery in 2021. The pattern followed in the subsequent year. in 2023, while gross and operating margins continued to improve, net margin entered negative zone. The detailed performance review of each of the years under consideration is given below.

In 2020 the company’s revenue plunged by 9 percent year-on-year on account of a massive decline in the sales of automobile sector. The outbreak of COVID-19 not only restricted the industrial and business activity but also put a dent on social activity, resulting in drastically lesser contribution from automobile customers. Not only did the equipment installation and sales dipped, monitoring fee and rental from tracking devices also remained lackluster during the year. Some of the sales decline was offset by navigation fee and E-ticketing fee as during the year, TPL Maps (Private) Limited and TPL Rupiya (Private) Limited were merged into TPLT. Cost of sales enlarged by 59 percent year-on-year in 2020, resulting in 62 percent thinner gross profit recorded by TPLT in 2020. GP margin dropped to 23.9 percent in 2020 as against 56.7 percent in the previous year. Lower business activity resulted in a curtailed distribution cost during the year. Administrative expenses also posted a marginal 1 percent growth, yet TPLT posted operating loss worth Rs.92.38 million during the year as against the operating profit of Rs.349.99 million in the previous year. Finance cost magnified by around 66 percent year-on-year on the back of increased borrowings coupled with high discount rate in the first three quarters of 2020. As of 2020, TPLT’s gearing ratio posted a massive jump in 2020 (see graph). While other income performed exceptionally well in 2020 and grew by over 160 percent year-on-year mainly on the back of income from related parties and non-financial assets, yet TPLT posted a massive net loss of Rs.458.52 million in 2020 as against the net profit of Rs.35.87 million in the previous year. Loss per share stood at Rs.3.81 in 2020 as against EPS of Rs.0.30 in 2019.

In 2021, all the business segments of TPLT performed above expectations. Navigation revenue went an extra mile to buttress the topline by growing by over 3 times in 2021. The topline grew by 18 percent year-on-year in 2021. Cost of sales inched up by 5 percent year-on-year in 2021, resulting in 58 percent rise in TPLT’s gross profit with GP margin climbing up to 32.1 percent. The company kept a strict check on its operating expenses which resulted in operating profit of Rs.189.97 million with OP margin of 10 percent in 2021. Research and development expense grew by 238 percent in 2021. Low discount rate during the year enabled the company to cut down its finance cost by 24 percent year-on-year, yet finance cost was big enough to turn operating profit into a net loss of Rs.120.20 million in 2021. Loss per share stood at Rs.0.64 in 2021.

In 2022, TPTL recorded a 12 percent year-on-year growth in sales. While connected car segment posted 7 percent rise during the year, digital mapping and location services registered a phenomenal 21 percent growth in its revenues during 2022. TPLT recorded 23 percent bigger gross profit in 2022 and GP margin of 35.4 percent owing to better sales mix, improved charges as well as cost control measures. Operating expenses grew in line with inflationary trend and also because of added employees in the workforce which took the tally to 901 in 2022 versus 809 in the previous year. Operating profit improved by 48 percent in 2022 and OP margin mounted to 13.3 percent in 2022. The company was also able to put brakes on its finance cost amidst high discount rate, by curtailing its gearing ratio to 49.8 percent in 2022 versus 59.48 percent in 2021. This resulted in net profit of Rs.197.12 million with NP margin of 9.4 percent in 2022 - the highest in all the years under consideration. EPS stood at Rs.1.05 in 2022.

In 2023, TPLT’s topline inched up by 7 percent over last year. While monitoring fee and rentals from tracking devices continued to march up, navigation revenue drastically fell in 2023. Equipment installation and sales also declined during the year. Lackluster performance of automobile and POL sectors were the main culprits behind sluggish topline growth attained by TPLT in 2023. Gross profit grew by 13 percent year-on-year in 2023 on account of cost control measures resulting in a better GP margin of 37.3 percent. Distribution expense inched up by 6 percent year-on-year in 2023 on the back of higher payroll expense, rent, rates and taxes as well as computer expense incurred during the year. While the company reduced its workforce from 901 employees to 811 employees in 2023, adjustment in minimum wage rate, higher legal and professional charges, vehicle running & maintenance as well as computer expense drove administrative expense up by 8 percent in 2023. Operating profit picked up by 21 percent in 2023 with OP margin rising up to 15.1 percent in 2023. Finance cost soared by 64 percent in 2023 due to higher discount rate. Finance cost was partially offset by 51 percent higher other income which was the consequence of higher mark-up income, service fee charged from Astra Location Services (Private) limited and account balance of TPL Properties Limited written off during the year. TPLT Profit before tax diminished by 99 percent in 2023. The company posted net loss of Rs.42.27 million in 2023 with loss per share of Rs.0.23.

Recent Performance (1QFY24)

TPLT kicked off FY24 on a vigorous note with its topline multiplying by 28 percent year-on-year. Better pricing, sales mix as well as improved volume and cost optimization resulted in 73 percent fatter gross profit recorded by TPLT in 1QFY24 with OP margin of 45 percent versus 33 percent during the same period last year. Distribution expense slid by 9 percent in 1QFY24. Conversely, administrative expense soared by 41 percent during the period. This translated into 145 percent rise in TPLT’s operating profit with OP margin rising up from 13 percent in 1QFY23 to 25 percent in 1QFY24. 15 percent higher finance cost was somewhat counterbalanced by 55 percent higher other income recorded during the period. Consequently, TPLT was able to post net profit of Rs.72.20 million in 1QFY24 versus net loss of Rs.31.51 million during the same period last year. The company posted EPS of Rs.0.39 in 1QFY24 versus loss per share of Rs.0.17 in 1QFY23. NP margin stood at 11 percent during the period under consideration.

Future Outlook

With the core revenue driver of TPLT i.e. auto sector being under pressure, the company is diversifying its business portfolio to continue growing in the face of economic and political headwinds. Digital location and mapping and Industrial IoT will continue to provide growth impetus to the company on the face of grappling auto tracking revenue. Besides, the company is also expanding its international revenue mix. The company also launched its ever-consumer navigation app which aims to focus on the pain points in Pakistan such as fuel consumption, optimized cost routing, improved navigation tools etc. With an augmented level of diversification, TPLT is expected to boast sustained performance and rebounding margins in the coming times.