Avante Logixx (XX.V), mcap=C$22m, price C$0.84 vs C$0.75

Pitch:
– Residential security business in high-end neighborhoods in Toronto.
– 20% penetration, low churn, and high recurring revenues.
– Recession-resistant business given the client base.
– Orphaned stock after key shareholder $FFH.TO (20%) and the founder (13%) blocked the sale of the company at C$1.6/share in Mar’22.
– One segment recently sold.
– Corporate overheads (to be reduced) overshadow the profitability of the remaining business.
– Half of the market cap is in net cash.
– More focused leadership after the founder returned as CEO.
– Already significantly cut operating expenses after head-office closure – $1.6m in annual savings still to be seen in financials.

Valuation:
– Trades at 3.5-5.0x EBITDA with half of the market cap in cash.
– Expected to be taken private by CEO and $FFH.TO at C$1.25/share using cash on the balance sheet and existing credit facilities.

Exp. gain: +67% to C$1.25.

Full $XX.V write-up (free guest account required):
https://www.valueinvestorsclub.com/idea/AVANTE_LOGIXX_INC/2677184828

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