The Gentrack Group Ltd (ASX: GTK) share price is down 11% to $4.32 today after the Auckland-based software company held its annual general meeting and provided a trading update.
Gentrack provides software services to airports and utility companies and claims to serve more than 220 sites across 30 countries.
It also has a reasonably strong track record of growth based on its organic and acquisitive growth strategy that has produced compound EBITDA growth of 24% since its 2014 initial public offering.
However, in 2018 the company did have to raise capital via a share issuance in order to pay down the substantial amounts of debt taken on as a result of the acquisitions.
The stock tumbled this afternoon after management told investors to expect EBITDA of NZ$12.5 million over H1 FY2019 compared to NZ$15.9 million in H1 FY 2018 or NZ$15 million in H2 FY 2018.
The falling EBITDA blamed on increased staff costs and the putting on "hold" of "substantial projects".
The good news is that the company expects to deliver full year EBITDA of NZ$31 million, however, this forecast is relying on a very strong second half to its fiscal year.
Last December I named Gentrack as one of three stocks I sold in 2018 exactly because of my expectation that Gentrack was set to deliver a soft fiscal 2019 compared to its forecasts and investor expectations.
Gentrack is also not a very liquid stock in another negative that puts me off as an investor at least.
Interestingly two of the other stocks I named in selling in 2018 as Ramsay Healthcare Ltd (ASX: RHC) and SEEK Limited (ASX: SEK) are both due to report this week.
Ramsay I sold out of totally, while SEEK I sold a significant amount of partly on valuation and outlook grounds.
