ASX:MXO
Motio Ltd
Investment Summary
The fund managers believe that Motio Ltd (MXO) presents an attractive investment opportunity despite current market volatility. In their opinion, MXO's business model as a "digital place-based media" firm, equipped with over 1600 screens across key industries, positions it well for growth. After making strategic acquisitions, the company has worked to enhance its asset portfolio and customer relationships, paving the way for stronger monetization. MXO’s financial outlook has improved, with upward revisions from an initial FY25 revenue forecast of $7.7m to $8.6m and cash EBITDA expectations rising from $800k to $1.2m. Furthermore, the company has strengthened its balance sheet by divesting a non-core asset, resulting in a clear net cash position of approximately $1.5m, eliminating concerns of equity dilution. Management's experience and alignment with shareholders further bolster investor confidence. Overall, MXO’s robust cash generation indicates a healthy operational foundation, suggesting potential for exceeding current guidance in a seasonally strong second half.
Commentary From The Managers
Mereweather Capital
31 Mar 2025
$0.03
- Mereweather Capital has initiated a position in Motio (MXO) due to short-term market volatility presenting unique opportunities.
- MXO operates as a digital place-based media business with over 1600 digital screens across various sectors such as medical centres and sports venues.
- The majority of MXO's screen network was established through four acquisitions since 2019, totaling approximately $6m.
- Post-acquisition, efforts were needed to refresh assets and engage customers, with a focus on enhancing advertisement utilisation.
- Management indicated that the bulk of foundational work is complete, shifting focus to monetising their network in FY25.
- MXO has consistently upgraded its FY25 financial guidance, from $7.7m revenue and $800k cash EBITDA to $8.6m revenue and $1.2m cash EBITDA.
- Management improved the balance sheet through divesting a non-core software asset, generating $1.35m cash and $1.4m free cashflow.
- Mereweather Capital views MXO’s cash generation as substantially stronger than reported profits, due to non-cash expenses affecting financial statements.
- MXO currently has an $8m market capitalisation and approximately $1.5m in net cash.
- Despite potential 2H uncertainty due to the Federal election, the seasonality trend suggests stronger performance in 2H for MXO.
- This investment aligns with Mereweather Capital’s strategy of targeting neglected micro and nano cap stocks.
- MXO management is experienced, with CEO Adam Cadwallader having nearly 25 years in the industry and ownership aligning with minority shareholders.
- The business model is capital light and generates high cash flow, operating in areas of structural growth despite traditional media weaknesses.
Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.