**What the business is ?**
Ituran is an Israel based debt-free co providing vehicle tracking and stolen-vehicle recovery subscriptions. its main market is Israel and Brazil. Ituran puts a small tracking unit in cars, motorcycles and trucks. Customers pay a subscription fee for this (74pc of its revenue comes from subscription). In Israel, insurers often require or reward this. For the businesses (car rental cos), and for car makers they pre-install its units (OEM deals, e.g. Stellantis "Connect Fiat" in South America; Yamaha and BMW motorcycles in Brazil) .
it also sells hardware units themselves for thin margin ( which is 24% of revenue). The interesting part is it has own control centres and field teams to locate and recover stolen vehicles
**Where?**
Israel 56% of revenue,
Brazil 22%,
rest of world 22% (Argentina, Mexico, Ecuador, the US and others)
Base assumption -
small subscription businesses with high retention and stable niche markets growing at 5-8% growth. OEM partnership can create significant burst of growth
**Threats :**
With Software Defined Vehicle appraoch, OEM becomes much more powerful and they can directly provided this service. They have direct access to data anyway.
Some countries may not like to do business with Israel based companies
**Counter arguments.**
OEM may want to stop at providing the data because tracking a stolen vehicle is a bit too much responsibility for the OEM
Ituran has several years of experience in recovering the stolen vehicles which cannot easily be replaced
In the case of rental companies owning multiple brand of cars, managing with multiple OEMs may be not be preferred.
**Possibilities**
1. the business grows fetching more oem deals across different countries 8% steady growth
2. Growths slows to 6pc but it continues its robust business.
3. A war leading to Israel currency falling, Brazil inflation goes out of control or loses in competition with oem - drops to 2% or gradually die.
**Valuation**
it has a net cash of Net cash is $103.7M
Total shares around 20M.
The price is about $52 ( $47 considering the cash)
approx $3.8 fcf per share
yield is 3.8/52 = 7%
with growth period - 10 years ,terminal growth rate - 3% , 10% expected return
with 10% growth - \~ 13% returns yearly
with 6pc growth ( most likely) - 11%
with 4 pc growth- approx 10%