MIDAS SHARE TIPS UPDATE: Rail tech firm Tracsis is just the ticket

Mick Lynch, head of the RMT transport union, is a controversial figure. He is a hero to his followers. To his opponents, he is a troublemaker. And to many in the railroad industry, he looks more like an ostrich.

Lynch, along with fellow union members, is calling for better wages and conditions for railway workers, even as Network Rail and the train operators grapple with declining passenger numbers, aging infrastructure and rising costs.

Even before the pandemic, the government spent more than £4bn of taxpayers’ money to keep the industry on track. Today, that figure is almost certainly even higher. Something has to be given so that the network can provide a decent service, without breaking the bank.

Tracsis may have some answers, using technology to make rail work better so that trains are more punctual, fares are fairer and travel is safer.

The company’s customers span every part of the rail industry. For train operators, Tracsis helps with scheduling, providing software that ensures that trains and employees are in the right place at the right time, so that daily schedules are efficiently managed and companies can optimize the use of their rolling stock.

Tracsis has also developed smart ticketing technology so that passengers can tap in and out as they travel, instead of paying in advance.

Designed for commuters who no longer travel to the office every day, the service ensures that passengers pay the cheapest fares on a daily or weekly basis.

The service is already being used by several train operators in London and is likely to be rolled out to other parts of the country. Tracsis also provides train companies with ‘Delay Repay’ technology, which refunds passengers if their journey is delayed.

For Network Rail, Tracsis software monitors railway lines, level crossings and other essential infrastructure to assess whether everything is in order.

Small gray boxes, placed discreetly along the railway tracks, use advanced technology to indicate when something has gone wrong or a part of the kit needs to be upgraded, so engineers can quickly fix or even prevent problems.

When repairs are needed, Tracsis provides digital tools to complete projects safely and quickly.

The group also owns a data imagery company, enabling companies to analyze storms, floods and other weather events and respond more quickly and effectively than in the past.

There is also a thriving business in America, which was recently acquired and offers significant expansion potential.

Midas recommended Tracsis in 2014 when the shares were £3.65. Shares have since risen to £9.80 with more to come.

Historically, the company grew largely through acquisitions. However, in 2019, Chris Barnes was appointed CEO, with the remit to continue acquiring complementary businesses, but also to ensure that the different parts of Tracsis work more closely together.

The process is starting to yield results, but should do so even more in the future. Brokers are forecasting a 12 per cent rise in revenue to £77m for the year to July, with profits up nearly 19 per cent to £13.9m and continued momentum into 2024 and beyond.

Most of the company’s extra money will be spent on business expansion, but Barnes is also keen to pay a dividend, with 2.3p for this year and 2.8p for 2024.

MIDAS VERDICT: The Great British Railways is a grand scheme to oversee rail transport in the UK, modernizing the service for the benefit of passengers, business customers and the taxpayer. Digital technology will play a key role. Tracsis is a pioneer in the field and the shares, at £9.80, still have to go. Just the ticket for existing and new investors.

Traded on: GOAL ticker: TRCS Contact: tracsis.com or 0845 125 9162