Next Investors logo grey

DTI kicking goals with 900 bus security contract


Published 21-MAR-2019 11:25 A.M.


3 minute read

Hey! Looks like you have stumbled on the section of our website where we have archived articles from our old business model.

In 2019 the original founding team returned to run Next Investors, we changed our business model to only write about stocks we carefully research and are invested in for the long term.

The below articles were written under our previous business model. We have kept these articles online here for your reference.

Our new mission is to build a high performing ASX micro cap investment portfolio and share our research, analysis and investment strategy with our readers.

Click Here to View Latest Articles

The award of an important contract to DTI Group Ltd (ASX:DTI) was announced late in the day on Wednesday, and it appeared to be missed by the market.

DTI is a recognised supplier to the mass transit surveillance market, and yesterday’s announcement regarding the installation and supply of advanced CCTV recording systems for 900 buses being delivered to Western Australia over the next 10 years is an important development.

Not only is this a sizeable contract in terms of driving revenue growth, but it also provides earnings predictability with less reliance on lumpy one-off contracts.

The contract is also an endorsement of the group’s technology which has already been adopted by major government and corporate organisations focused on improving their security.

Increasing demand for identification enabling technology

The issue of security in public places has been very much to the forefront in the last week following the atrocities that occurred in Christchurch.

However, in terms of regularity of physical attacks and the like, public transport has really come under the spotlight.

Attacks on drivers and other commuters have become a regular occurrence, and more recently bus drivers highlighted serious health conditions they were experiencing as a result of commuters sniffing paint while in transit.

Identifying perpetrators is at the heart of addressing these problems, and the difficulty in finding the source of offensive behaviour was highlighted this week in relation to AFL star Tayla Harris who was denigrated by seemingly anonymous online trolls.

Michael Wilson/AFL Media

Technology targets multiple markets

While DTI’s technologies don’t play a part in internet security, it underlines the necessity for identification.

On this note, the company provides sophisticated surveillance systems, solutions and services to the mobile security industry worldwide.

DTI’s clients are transit agencies, transit operators, freight operators, law enforcement authorities and taxi organisations which utilise a range of professional products and services that encompass on-board recording equipment, fleet management systems, back-end mass storage and retrieval facilities and end-to-end managed services.

The rail sector is an important market for DTI, and the company currently has a tender pipeline with original equipment manufacturers of $213 million.

Reaping the rewards of past investment

Spending on research and development peaked at $7 million in 2017, with a combined expenditure of $10 million in the three years leading up to that point.

Management recently noted that R&D expenditure is now at an anticipated steady-state level of $2 million per year, marking a point where the company should transition to regular and growing profitability.

Importantly, the company isn’t solely reliant on winning new work as the proportion of income being generated from maintenance work has been growing steadily in recent years.

With a substantial uptick in revenues and three consecutive six-month periods of improving margins, this could well be the line in the sand where DTI experiences positive earnings related share price momentum.



General Information Only

S3 Consortium Pty Ltd (S3, ‘we’, ‘us’, ‘our’) (CAR No. 433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information and is for informational purposes only. Any advice is general advice only. Any advice contained in this article does not constitute personal advice and S3 has not taken into consideration your personal objectives, financial situation or needs. Please seek your own independent professional advice before making any financial investment decision. Those persons acting upon information contained in this article do so entirely at their own risk.

Conflicts of Interest Notice

S3 and its associated entities may hold investments in companies featured in its articles, including through being paid in the securities of the companies we provide commentary on. We disclose the securities held in relation to a particular company that we provide commentary on. Refer to our Disclosure Policy for information on our self-imposed trading blackouts, hold conditions and de-risking (sell conditions) which seek to mitigate against any potential conflicts of interest.

Publication Notice and Disclaimer

The information contained in this article is current as at the publication date. At the time of publishing, the information contained in this article is based on sources which are available in the public domain that we consider to be reliable, and our own analysis of those sources. The views of the author may not reflect the views of the AFSL holder. Any decision by you to purchase securities in the companies featured in this article should be done so after you have sought your own independent professional advice regarding this information and made your own inquiries as to the validity of any information in this article.

Any forward-looking statements contained in this article are not guarantees or predictions of future performance, and involve known and unknown risks, uncertainties and other factors, many of which are beyond our control, and which may cause actual results or performance of companies featured to differ materially from those expressed in the statements contained in this article. S3 cannot and does not give any assurance that the results or performance expressed or implied by any forward-looking statements contained in this article will actually occur and readers are cautioned not to put undue reliance on forward-looking statements.

This article may include references to our past investing performance. Past performance is not a reliable indicator of our future investing performance.