Aqua Power Systems, Inc. (OTC: APSI) recently acquired the fast-growing Tradition Transportation Group and checked all the boxes:
Sales are anticipated to be full year 2022 in the range of $125 million with a net profit of $4.5 million. Full results will be announced next month.
In 2021, Tradition reported revenue of $87,695,384 and a net profit of $2,986,945
In 2020, the company generated $49,992,274 and net income of $1,738,623
APSI moved from a shell OTC company to a bona fide asset-based transport/trucking firm with seven subsidiaries. APSI bought Tradition and all of its subsidiaries for $28,548,458.76.
Up List Application To OTCQB Exchange Already Filed
APSI has already filed an application with the SEC for an uplist to the OTCQB exchange. A NASDAQ listing is its ultimate goal.
APSI has just 17,204,180 shares outstanding. Yet, it is trading at a market cap of only $5.6 million.
By any measurement of revenue, net income, or assets, it deserves better. In fact, it should trade at well above $1 per share—and perhaps closer to $6-7 per share. The APSI market cap appears to be well undervalued as it currently stands.
One valuation analysis vs.10 competing transportation public companies finds that the median enterprise LFY valuation in this sector is 1.6X revenues. That would translate into an APSI market cap of some $200 million, based on 2022 full year sales of $125 million.
Average enterprise based on LFY is 3.2 times revenues — it means APSI would have a market cap of $400 million with share price of $23.25. Even a one time revenue share price at the estimated 2020 sales of $125 million would translate into $7.26 per share.
“This has to be one of the most undervalued companies publicly listed today,”
In terms of assets, Tradition Transport is a solid investment that delivers revenue, net income via a fleet of owned trucks/trailers and warehouses.
Tradition Transport By Any Measure Deserves Higher Price Per Share
The answer has to be that the transaction happened so recently — only late last year — that investors are still not aware of APSI. When it up lists, they will be. Investors should keep APSI on their Watch Lists because of the Company’s asset-based acquisition in the hot transport business — freight, logistics, warehousing, brokerage, leasing and more.
Its assets include: six warehouses totaling two million sq. ft., four in Indianapolis and two in Georgia; a fleet of 162 company-owned tractors and some 303 trailers; plus Anthem Anchor Bolts & Fasteners, LLC, a subsidiary that manufactures bolts and fasteners and creates custom plates, cages and embeds
APSI’s Tradition Transport Aggressively Planning For The Future
Tim Evans, president and Director; Joseph Davis, COO of Tradition and also President, Treasurer and Director of acquiring firm APSI; and Robert Morris, CEO and Director of APSI, say APSI’s Tradition Transport is a high-tech firm with multiple revenue streams in the logistics, drayage, and warehousing/brokerage businesses. Tim Evans says, “We see opportunities everywhere.”
Tradition is high-tech, multi-revenue, and diversified, with land, sea, and warehousing divisions plus brokerage and drayage all playing key roles as it grows.
Why APSI's Entry Into Transport/Logistics Deserves Review By Investors
Here’s how it is detailed in an APSI 8K filing :
Technology includes the Samsara ‘to-the-second’ GPS tracking and smart geofencing visibility to improve router performance. SkyBlitz offers commercial telematics, tank monitoring and petroleum logistics. Tradition is converting to TMW for transportation management solutions. Camelot Software provides warehouse management systems.
Tradition has a list of some 500 active customers. It serves a diversified base of industries such as building materials, automotive, manufacturing, containers and food. This broad spectrum gives Tradition a stable client footprint.
Tradition's goal is to acquire another 200 plus tractors and some 400 trailers in 2023 and 2024.
More deployment centers for Tradition are scheduled to open in Savannah, Nashville, Dallas and Indianapolis.
New terminals are being planned for Dallas, the Southeastern US, and the Pacific Coast as Tradition seeks to increase its presence on the West Coast.
To diversify its business, Tradition is seeking in the future to grow its manufacturing base. It is introducing U-bolt manufacturing while adding more diversification to its products.
Tradition plans to grow both its brokerage and drayage businesses. These are among the fastest-growing segments of the Company. Brokerage revenue grew greater than 370% in 2021 vs 2020. Tim Davis calls it a ‘driving platform’ for the Company's future. A second brokerage office is under way.
Drayage is also a vital growth area. Tradition is able to move freight, not just through trucks, but from drayage via unloading ships at a port, storing it in a nearby warehouse, then moving the freight by truck and also by rail.
M&A is on the horizon. In addition to its organic growth structure, Joseph Davis says Tradition Transport is already reviewing future potential buyout candidates. “We’ve identified some acquisition targets. These are specialty businesses related to the ones we are already in.”
In warehousing, an important profit area, Tradition operates six warehouses totaling some two million sq. ft. Joseph Davis stated the Company plans to add two-three more warehouses annually in the future — about one million sq, ft, more every year in the future.
Tradition is planning to grow its international business. It already services freight to-and-from Mexico and Canada. In terms of international, trucks accounted for 66.1% of the surface trade between the US and Canada and 82.7% of surface trade between the US and Mexico in 2021, the American Trucking Association (ATA) reports.
Trucking A $875.5 Billion Business
The ATA finds that trucks moved more than 72% of all freight in the US by weight in 2021. It added that gross freight revenues from trucks amounted to $875.5 billion, or 80.8% of total revenue generated by the freight industry that year.
A team with a combined experience of about 120 years runs Tradition's management. Managers plan for the future and can foresee the future needs of that industry. For example, Joe Davis predicted a stronger business in warehousing now as freight movement cools down.
Press reports document his view.
The Wall Street Journal reports that ocean shipping is now off 10% from China vs. Pandemic highs — a number that has declined three months in a row. As the logjam of some 100 sea vessels off the Port of Los Angeles has virtually disappeared, the need for more sophisticated logistics warehousing has grown within the US. Tradition is experienced in seeing the future of freight movement globally.
CONCLUSION
APSI stock is undervalued at industry sector multiples. Investors may want to put APSI on their watch lists as it grows. Right now, it is priced below market. By acquiring Tradition Transport and its subsidiaries, Aqua Power Systems, Inc. (OTC: APSI) moved from a shell company to a 2022 estimated $125 million sales and $4.5 million net income asset-based firm. It has filed an application to up list to the OTC QB exchange. This is a company in expansion mode. Investors take note.
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