HiTech Group Australia Limited ASX:HIT

• Founded in 1993, listed on the ASX in 2000 at $0.70
• MC $83m
• What they do: Supplies permanent/contract staff from their pool of specialised ICT/finance/office support professionals. Majority of their revenue in FY21 was from contracts with the Federal Government (93% of revenue), with the remaining coming from State Government and private sector contracts.
• HiBase (their database) contains 380,000 candidates if a client needs a job to be filled (contract/project basis or permanent). They help clients find the right talent for highly specialised jobs - eg cybersecurity, cloud computing etc. HiBase

What I like:

• Proven execution strategy in winning contracts with blue chip clients like the Fed and state governments. I believe all of their growth has been organic. The thing with supplying talent for government agencies is that it takes time to form this trust, and I believe this has helped the company win contracts so far.
• They are operating in a niche space, and the ongoing digital migration is a massive tailwind for them. More budget for their clients = more spend with HIT. I also suspect management has not taken any risk in expanding into collateral spaces for the sake of it, they have stuck to what they know they do best. Also the Great Resignation / shortage of IT talent may also a tailwind for HIT.
• Still founder led - The Hazouri brothers own a combined ~65% of the outstanding shares. Ray Hazouri is the Chairman, and Elias Haziouri is the CEO.
• Steady rising revenue in last 5 years, ample cash reserves + no LT debt, consistent share count.
• Dividends growing last 5 years. Decent fully franked 5% yield based on today's price ($2.13)

What I am keeping my eye on:

• Illiquid register
• Board is controlled by the Hazouri brothers - buying into this company also means putting full faith in the management//founders to deliver shareholder returns
• This is a mature company, there is no real advantage in scaling (operating costs rising steadily with growing revenue).