CeoTronics Investment Thesis
68% Recurring Revenue, 388% Net Income Growth, 11x Forward Earnings
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CeoTronics makes communication systems for people who can’t afford communication failure.
Military units in combat. Police on tactical operations. Firefighters in burning buildings. Aviation crews. Workers in hazardous industrial environments.
When you’re coordinating a tactical assault or navigating through smoke and heat, your comms equipment either works or people die. That’s the value proposition.
The company designs, engineers, and manufactures roughly 94% of its components in-house in Germany. This isn’t outsourced to the lowest bidder. It’s vertically integrated, security-cleared, and built to military specifications.
Three segments:
Audio Communication is the core business. Helmet-integrated headsets, radio modules, covert systems for law enforcement.
Video Communication is smaller but growing. Tactical video capture, helmet-mounted surveillance, situational awareness tools.
Service & Support is where the model gets interesting. Training, maintenance, software updates, system integration. This is the recurring revenue engine.
And that recurring revenue piece is what transforms this from a cyclical hardware manufacturer into something far more valuable.
In the rest of this post, I discuss:
Why the business model has fundamentally changed
The recent results and what they mean
Why this is being overlooked
Valuation and risks
My opinion and whether it’s in my portfolio