NTG CLARITY NETWORKS INC.
Leading Canadian IT Services & Solutions Provider Making Significant Inroads in Fastest-Growing Economy in the G20
Investment Rationale
NTG Clarity Networks, Inc. has evolved into a prominent international software and service provider and presents a compelling buy opportunity based on its past performance, growth potential, and current valuation. The company operates in a diverse range of sectors, offering telecommunications engineering, Information Technology, networking, and related software solutions to clients in the telecommunications, oil and gas, automotive, banking, and government industries. This broad spectrum of offerings has played a pivotal role in the company’s remarkable growth trajectory, allowing it to recently enhance its profit margins. The company’s revenues in the first nine months of 2023 were up by 64% from 2022. Recurring professional service revenue contributed 95% of the company’s Q3 2023 revenue. In 2024, the company aims to achieve a revenue target of $50 million and a 10% bottom-line profit margin. The company has been profitable for 2 years now.
The Kingdom of Saudi Arabia (KSA) is a key market for NTG Clarity. KSA’s robust economy, due in large part to strong oil prices, continues to show increasing demand for the company’s products and services. Expansion in the Financial sector and establishing an offshore center in Egypt are additional growth drivers.
The stock is trading at a compelling valuation. Based on our DCF model, its EV comes to C$140.6 million with a market capitalization of C$134.5 million. That implies an upside of 7 times its current market value. Likewise, based on relative valuation, the stock offers a compelling upside. NTG’s PE multiple implies an upside of 3.4x and the PS multiple implies an upside of 5.2x based on the average multiples for its peers.
