Eroad shares rise on NZX debut
Shares in transport technology firm Eroad have climbed 12 per cent over their listing price during their first day on the NZX, despite a competitor appearing to rain on the company's parade.
The debut was the strongest among the recent string of technology floats and follows the successful float of cinema technology firm Vista on Monday.
Eroad chief executive Steven Newman maintained the Auckland firm had advantages that distinguished it from its competition.
"You hope for things, and it's a great start," he said, commenting on its NZX debut.
Eroad employs 115 staff and makes telemetric systems that can monitor commercial vehicles and pay road-user charges electronically.
It is forecasting revenues of $19 million this financial year and $34m in 2015-16, expecting most of the growth would come from its existing markets in New Zealand and Oregon. It raised $40m of new capital from its initial public offering, which it will use to fund its international expansion.
Stephen Brown, the Australasian general manager of rival Kiwi family-owned transport technology company International Telematics, which is also based in Auckland, said today that it had higher revenues than Eroad.
He based his claim on the revenue of $10m Eroad reported in its prospectus for the year to March.
Brown also said International Telematics had more customers than Eroad in the US and Australia.
"I think Eroad have 500 units in North America and we have got north of 5000, and in Australia we have probably 2000 or 3000 units and they have got a couple of hundred," he said.
Brown said International Telematics, which employs 50 staff, was partway through a private capital raising backed by some of its US dealers and other "high net worth individuals". The capital raising had been based on a lower valuation than Eroad's.
Brown estimated at least 27 companies were providing location-based services to transport providers in New Zealand. Although International Telematics' system could also be used to collect road-user charges, its particular area of focus area was in maintaining tabs on refrigerated vehicles, he said.
International Telematics is 85 per cent owned by Blenheim's Marris family and had wanted to remain privately owned, but wanted the extra capital to expand its presence in the US, he said.
Brown said he wanted to draw attention to International Telematics' achievements because he believed it had a good story to tell and to "put some balance in the marketplace".
Despite that, Brown said Eroad's public listing would be positive for the industry and the country.
"The more people are aware of the technology, the better it is for everyone. They have done a great job and have a good product, but we think there is space in the market for different products," he said.
Newman said last month that one the biggest risks facing Eroad was that others might move in on the "global opportunity" it had helped create.
The key risks it identified in its prospectus included the costs of expanding in US, the possibility its competitive position might deteriorate and the chance it might be forced to defend patent claims.
"Servicing the road transport industry may attract competition, possibly from major technology companies with greater resources," it said.
Eroad had made it clear there were other companies that provided some of the services it supplied, he said today.
"In terms of companies that have developed a platform that is secure, scalable, of a quality that can be used to calculate and collect taxes such as road-user charges, and that meet the federal infrastructure guideline standards in the US, there is only one," he said.
"The standards in the US are a lot higher and more demanding than what we have in New Zealand."
New wins included a deal with Halls, which Newman said was the largest refrigerated transport company in New Zealand.
Halls agreed last week to equip its fleet of 300 tractors, 350 trailers and 90 railway wagons with Eroad's telematics systems, saying that based on its analysis and trials it was the superior solution.
Eroad's shares were trading up 36 cents at $3.36 in lunchtime trading, valuing the company at $201.6m.
This story has been updated to correctly identify the people in the photo.