4SIGHT HOLDINGS LTD

Our opinion on the current state of 4SIGHT(4SI)

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4Sight (4SI) is a Mauritian company specializing in investing in "4th Industrial Revolution" companies and technologies. The first industrial revolution is seen as that which was involved in mechanization with water and steam power, the second came about when products were mass-produced, the third was the advent of computers and automation, and the fourth is what are called "cyber-physical systems." Cyber-physical systems involve cloud computing and the internet of things, evident in the development of so-called "smart factories."

The business is divided into two areas: mining & manufacturing, and software, cloud, and enterprise solutions. It has 400 employees and 3,000 customers in 30 countries. It claims to have 42% of its income coming from outside South Africa. Since listing in October 2017, the share price fell from 235c to levels around 13c in September 2019. Since then, it has rallied to 31c. The company does not yet pay dividends.

A company like this is extremely difficult to evaluate unless you have a deep understanding of the 4th industrial revolution. We would recommend a strict stop-loss strategy. On 6th October 2020, the company announced that it had bought back 30.6% of its issued ordinary shares and had finalized its sale of Digitata for just over R90m.

In its results for the 14 months to 29th February 2024, the company reported revenue up 57.7% from the year to 31st December 2022. Headline earnings per share (HEPS) were 153.8% higher. The company said, "Cash balance increased by 57.8% from R70.3 million to R110.8 million. Increase in net asset value per share by 29.6% to 57.8 cents per share. Revenue excluding consulting revenue increased by 54.5% from R479.0 million to R740.1 million, which contributed to the increase in the cost of sales by 53.1% from R361.4 million to R553.3 million." Note: The company has changed its financial year end to 29th February from 31st December.

We added this share to the Winning Shares List on 3rd August 2023 at 31c. Over the following six months, it moved up to 84c per share. Technically, the share is a penny stock that trades about R168,000 per day on average, which makes it practical for private investors.

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