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Aqua Power Systems,Inc. (OTC: APSI) recently acquired the fast-growing TraditionTransportation Group and checked all the boxes:
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Sales are anticipatedto 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.
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In2021, Tradition reported revenue of $87,695,384 and a net profit of$2,986,945
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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-basedtransport/trucking firm with seven subsidiaries. APSI bought Traditionand all of its subsidiaries for $28,548,458.76.
Up List ApplicationTo OTCQB Exchange Already Filed
APSI has already filed an application withthe SEC for an uplist to the OTCQB exchange. A NASDAQ listing is itsultimate goal.
APSI has just 17,204,180 shares outstanding. Yet, it is tradingat a market cap of only $5.6 million.
By any measurement of revenue, net income, orassets, it deserves better. In fact, it should trade at well above $1per share—and perhaps closer to $6-7 per share. The APSI market capappears to be well undervalued as it currently stands.
One valuation analysisvs.10 competing transportation public companies finds that the median enterprise LFY valuation in this sector is 1.6Xrevenues. That would translate into an APSI market cap of some $200million, based on 2022 full year sales of $125 million .
Average enterprise based on LFY is 3.2 times revenues — it means APSIwould 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 oneof the most undervalued companies publicly listed today,”
In terms of assets,Tradition Transport is a solid investment that delivers revenue, netincome via a fleet of owned trucks/trailers and warehouses.
Tradition TransportBy Any Measure Deserves Higher Price Per Share
The answer has to bethat the transaction happened so recently — only late last year —that investors are still not aware of APSI. When it up lists, theywill be. Investors should keep APSI on their Watch Lists because ofthe Company’s asset-based acquisition in the hot transport business— freight, logistics, warehousing, brokerage, leasing andmore.
Its assetsinclude: six warehouses totaling two million sq. ft., four inIndianapolis and two in Georgia; a fleet of 162 company-owned tractorsand some 303 trailers; plus Anthem Anchor Bolts & Fasteners, LLC,a subsidiary that manufactures bolts and fasteners and creates customplates, cages and embeds
APSI’s Tradition Transport Aggressively Planning For TheFuture
TimEvans, president and Director; Joseph Davis, COO of Tradition and alsoPresident, Treasurer and Director of acquiring firm APSI; and RobertMorris, CEO and Director of APSI, say APSI’s Tradition Transport isa high-tech firm with multiple revenue streams in the logistics,drayage, and warehousing/brokerage businesses. Tim Evans says, “Wesee opportunities everywhere.”
Tradition is high-tech, multi-revenue, anddiversified, with land, sea, and warehousing divisions plus brokerageand drayage all playing key roles as it grows.
Why APSI's EntryInto Transport/Logistics Deserves Review By Investors
Here’s how it isdetailed in an APSI 8K filing :
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Technology includes the Samsara ‘to-the-second’ GPStracking and smart geofencing visibility to improve routerperformance. SkyBlitz offers commercial telematics, tank monitoringand petroleum logistics. Tradition is converting to TMW fortransportation management solutions. Camelot Software provideswarehouse management systems.
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Tradition has a list of some 500 activecustomers. It serves a diversified base of industries such as buildingmaterials, automotive, manufacturing, containers and food. This broadspectrum gives Tradition a stable client footprint.
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Tradition's goal isto acquire another 200 plus tractors and some 400 trailers in 2023 and2024.
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More deployment centers for Tradition are scheduled to open inSavannah, Nashville, Dallas and Indianapolis.
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New terminals are beingplanned for Dallas, the Southeastern US, and the Pacific Coast asTradition seeks to increase its presence on the WestCoast.
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To diversify its business, Tradition is seeking in the future to growits manufacturing base. It is introducing U-bolt manufacturing whileadding more diversification to its products.
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Tradition plans to growboth its brokerage and drayage businesses. These are among thefastest-growing segments of the Company. Brokerage revenue grewgreater than 370% in 2021 vs 2020. Tim Davis calls it a ‘drivingplatform’ for the Company's future. A second brokerage office isunder way.
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Drayage is also a vital growth area. Tradition is able to movefreight, not just through trucks, but from drayage via unloading shipsat a port, storing it in a nearby warehouse, then moving the freightby truck and also by rail.
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M&A is on the horizon. In addition to itsorganic growth structure, Joseph Davis says Tradition Transport isalready reviewing future potential buyout candidates. “We’veidentified some acquisition targets. These are specialty businessesrelated to the ones we are already in.”
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In warehousing, animportant profit area, Tradition operates six warehouses totaling sometwo million sq. ft. Joseph Davis stated the Company plans to addtwo-three more warehouses annually in the future — about one millionsq, ft, more every year in the future.
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Tradition is planningto grow its international business. It already services freightto-and-from Mexico and Canada. In terms of international, trucksaccounted for 66.1% of the surface trade between the US and Canada and82.7% of surface trade between the US and Mexico in 2021, the AmericanTrucking Association (ATA) reports.
Trucking A $875.5Billion business
The ATA finds that trucks moved more than 72% of all freight inthe US by weight in 2021. It added that gross freight revenues fromtrucks amounted to $875.5 billion, or 80.8% of total revenue generatedby the freight industry that year.
A team with a combined experience of about 120years runs Tradition's management. Managers plan for the futureand can foresee the future needs of that industry. For example, JoeDavis predicted a stronger business in warehousing now as freightmovement cools down.
Press reports document his view.
The Wall Street Journal reports thatocean shipping is now off 10% from China vs. Pandemic highs — anumber that has declined three months in a row. As the logjam of some100 sea vessels off the Port of Los Angeles has virtually disappeared,the need for more sophisticated logistics warehousing has grown withinthe US. Tradition is experienced in seeing the future of freightmovement globally.
CONCLUSION
APSI stock is undervalued at industry sectormultiples. Investors may want to put APSI on their watch lists as itgrows. Right now, it is priced below market. By acquiring TraditionTransport 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 applicationto up list to the OTC QB exchange. This is a company in expansionmode. Investors take note.
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