MIDAS SHARE TIPS: Microlise, transport tech firm you can really dig

JCB is a phenomenal British success story. Based in the town of Uttoxeter in Staffordshire, the group exports excavators worldwide and have a reputation for reliability. But breakdowns do happen and when they do, construction projects can be held up at a huge cost.

Fast growing technology company Microlize helps JCB and its customers maintain vehicles more effectively and repair them quickly if they do go wrong.

The group installs a special kit in the excavators that alerts users if something is wrong and identifies what happened if there is a malfunction. The gadgets can already be found in some 250,000 diggers around the world, including Antarctica. More are on order this year as the technology can make a huge difference to JCB customers, especially those in faraway places.

The truck manufacturer is just one customer of Microlise. As a company specializing in transport related technology, the group works with almost every major UK retailer to help them optimize delivery routes, keep drivers safe on the road and ensure fleet compliance.

Microlise entered the junior AIM market in July 2021 at £1.35 per share. Today the stock is £1.13, but companies are clamoring for Microlise products.

Customers include all major supermarkets, top retail chains such as Marks & Spencer, Next and DFS, and delivery companies from Royal Mail to DPD. Some companies use Microlise to work out routes from warehouse to store. Others rely on the Nottingham-based group to calculate how best to deliver goods to consumers’ homes.

The company’s software is used by over 200,000 drivers in the UK and customers’ savings are huge. Microlise also wins business abroad. Top Australian supermarket Coles is a customer, French companies are joining and further expansion is expected in Europe and the Asia-Pacific region.

Chief executive Nadeem Raza has been with Microlise for nearly 40 years, joining as a software engineer and taking the top job in 2008.

He knows the company inside out and has helped the company develop a name for reliability, service and innovation.

Today, its technology is needed more than ever. Fuel costs are high, driver wages are rising, businesses are under pressure and regulations are extensive, from how fast drivers drive to whether vans are properly maintained.

Microlise can help on all fronts and once customers sign up, they rarely leave. Contracts also generally run for five years, so Raza can forecast base earnings several years in advance.

The company was hit by a shortage of microchips in 2022, but brokers are still expecting a 5 per cent increase in annual revenue to £63 million and a profit increase of almost 9 per cent to £5 million.

Continued steady growth is expected for this year, with the pace picking up in 2024 as economic activity picks up, supply chain issues ease and the company gains ground outside the UK.

Midas verdict: Microlise is a strong, well-run company that offers a service that helps companies save money and work more efficiently. Raza is also highly motivated to succeed, owning just over 50 percent of the stock, and is eager to pay dividends as the company grows. At £1.13, the share is a bargain.

Traded on: GOAL Ticker: SAAS Contact: microlise.com or 01773 537 000