Karooooo: Southeast Asian Opportunity Indicates Strong Growth Prospects

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Karooooo is continuing to expand in Southeast Asia, leveraging favorable market conditions and an underpenetrated market.The Southeast Asian telematics market is projected to grow at a CAGR of 11.53% ...

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The company has had an incredibly successful 5 years, growing subscribers in each of their 4 key regions. Building on their success in South Africa, KARO expanded to Asia in 2016 through Cartrack, their wholly owned subsidiary, and have signaled their anticipation of strong growth opportunities in Southeast Asia, notably by moving their headquarters and R&D center to Singapore, with Zak Calisto (Founder and CEO) permanently relocating to Singapore. The region boasts many desirable growth catalysts for telematics solutions, including rapid urbanization, continued investment in telecommunication infrastructure and strong growth of e-commerce. Based on the recently released Q2 2025 results, showing strong growth in the Asian region, I anticipate that KARO’s bet on Asia will pay off, and therefore classify the stock as a buy. Southeast Asian Telematics Market Strong GDP growth in various countries in the region has set the stage for rapidly developing logistics and transportation sectors, which in turn stimulate stronger demand for telematics and fleet management solutions. The region is, however, still largely underpenetrated with estimated penetration rates of below 10% for personal vehicles and between 20% and 30% for commercial fleets in countries like Indonesia and Vietnam. Despite the low penetration, the industry is forecasted to grow at a CAGR of 11.53% between 2024 and 2029, adding an estimated 3.41 million automotive IoT devices in the region by 2029, for a total of 4.77 million units. The growth is further supported by continued regulatory requirements concerning the safety of vehicles in the region and continued scrutiny on CO2 emissions, such as Singapore’s Vehicular Emission Scheme (VES), which indirectly stimulates demand for telematics devices. KARO’s Strategic Position There are a few reasons why KARO is well positioned to capture the expanding telematics market in Southeast Asia. The company has been operating in the region since 2016 and they have a physical presence in the region. Furthermore, the company was founded and grew in South Africa, which, much like many Southeast Asian countries, is an emerging market with price sensitive customers. KARO also has experience in individual retail customer telematics solutions, which means that although they have the scalability to service large enterprise customers, they can tailor solutions for smaller businesses, which dominate the Southeast Asian market. The company indicated that they intend to target large enterprise customers (defined by KARO as clients with a fleet of over 100 vehicles) and considering the popularity of light commercial vehicles in the region, due to the populous roads, short delivery distances and fuel efficiency of LCVs, the intended customer base should be in strong supply. Challenges The market is characterized by price sensitivity, due to the prevalence of SMEs in the region. As mentioned above, KARO’s South African success indicates that they are able to price efficiently in tight markets. There may also be challenges regarding local infrastructure, which in many cases lag behind modern solutions, although the gap is being closed, as evidenced by (amongst other factors) the expansion of 5G connectivity in the region. Finally, local and international competitors should be considered. Locally, the telematics market has many small companies, operating locally for the most part. Internationally, most competitors either avoid the Asian market or fail to cement a strong market position. Forecasts and Price Target Forecasting total subscriber growth in the Asia region requires a two-stage approach, one for high growth expected in the near term and then a long-run average growth period. Using historic growth rates and the first two quarters of 2025 results, I forecast the Asian subscriber rate as follows: Asian Region Subscription Growth Forecast     2025 2026 2027 2028 2029   Subscribers 299,183.30 388,938.29 513,398.54 677,686.08 894,545.62   Growth 30.00% 30.00% 32.00% 32.00% 32.00%   Sub. Revenue 670,170,592 871,221,770 1,150,012,736 1,518,016,811 2,003,782,191   Click to enlarge Accounting for other regions (at average annual subscription growth rates), produces the following subscription revenue forecast (ZAR): Forecasted Revenue, EBITDA and EV (2025 – 2029)   Subscribers 2025 2026 2027 2028 2029   South Africa 1,716,698 1,974,203 2,270,333 2,610,883 3,002,516   Europe 299,183 388,938 505,620 657,306 854,497   Africa-Other 191,872 220,653 253,750 291,813 335,585   Sub. Revenue             South Africa 2,884,052,892 3,316,660,826 3,814,159,950 4,386,283,942 5,044,226,533   Europe 550,497,272 715,646,454 930,340,390 1,209,442,507 1,572,275,259   Africa-Other 303,157,365 348,630,970 400,925,615 461,064,457 530,224,126   Other Regions 3,737,707,529 4,380,938,249 5,145,425,955 6,056,790,906 7,146,725,918   Total Sub. Revenue 4,407,878,121 5,252,160,019 6,295,438,690 7,574,807,718 9,150,508,109   Other Revenue 881,575,624 1,050,432,004 1,259,087,738 1,514,961,544 1,830,101,622   Total Revenue 5,289,453,745 6,302,592,023 7,554,526,429 9,089,769,261 10,980,609,731   EBITDA 2,221,570,573 2,647,088,649 3,172,901,100 3,817,703,090 4,611,856,087   Enterprise Value (mm) 24,437.28 29,117.98 34,901.91 41,994.73 50,730.42   Shares in Issue 30,890,000 30,890,000 30,890,000 30,890,000 30,890,000   Implied Share Price (ZAR) 791 943 1,130 1,359 1,642   Implied Share Price (USD) 45.21 53.86 64.56 77.69 93.85   Click to enlarge Both EBITDA and EV calculation based on average margin and multiple for the past 5 years. Conclusion  KARO is a growing company, despite many years of operation there remains substantial opportunity in global markets. I expect the company to successfully navigate the challenges presented by the Asian region and realize the potential growth management expects.","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"analysis","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.3","shortVersion":"4.29.3","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2477318923"}