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the last update we've had was the 12th Aug one when they said H2 numbers would be ahead of previous year and on track to previously announced - so c£6.7m for year.
We've heard nothing since so assume we must still be on track, else they would need to inform the market. We are now in mid Nov so for me no news is good news.
Unfortunately share price has lagged behind and any minor issues are overblown e.g. auditor change and the recent negative RNS (when news was positive)
delayed payments/ delayed deliveries - sorry was bundling them together, most of the deals are staged e.g. up front payment, deliver X amount, another payment, deliver final amount (so hopefully, you never end up in that latter situation)
So yes 200K was delivered in 2018, with the remaining 900K to be delivered in 2019, as RNS'd a significant portion of the remaining money was received in H1 2019 hence why my focus would solely be on H2 2019 - also for the reasons listed in my previous post regarding the timing of the release of Lokies, the TDL 140, Zero Production (they obviously had pre-orders though, so you could say from March 2019 for that) and other interesting developments such as CropX funding in the Summer - if they hit 3.7m for H2, then a decent TU with an optmistic outlook for 2020 regarding these partners could get the market seriously interested again
not investment advice do your own research etc.
Genuinely thank you very much for this information, i really appreciate you taking the time. It's given me a lot of really useful information
Chaps - you recognise revenue when ownership changes - I.e. on delivery of the goods . Delayed payments have no effect on the P&L ( unless of course the debtor goes bad an you have to provide for it ).
Also H2 includes (hopeully)
- Bosch TDL release (june)
- Cargo Signal IAG link
- Contguard AXA (April)
- Lokies (June)
- Zero MC full 6 months (pre orders until may 2019)
- Shiptek / Union Bank Tie Up (XLOG)
May be others, but quite a lot happened between April and July - hence my optimism for H2
Hi HM no problem, no advice intended of course
As for 7.1m, not quite - at the end of 2017 there was I believe delayed payments (cropX) and a very strong Q1 (1.5m USD) likely from these delayed payments, so although a target of 7.1m seems fair, historically there has always been a deal or two that never quite landed in the financial year so on a VS 2018 basis it is not a fair reflection to include the NA contract in 2018 figures IMO of course
IMO it is best to focus on H2, I doubt any of the NA deal will land in H2 as I believe most of it if not all landed in H1, therefore a 3.7m H2 without this deal should bode very well, and put them on target for that game changing 7-8m range+ for the FY 2020 (and hopefully much more of course)
Firstly, thank you for the compelling case and there were a few new names to me that I shall do my DD on.
But. Last year there was a delayed payment from an African company, I always get nervous with African deals, having been burnt in the past. That's another story.
So if that £1.1mln had have been paid on time, the last yrs revenues "should have been" £7.1mln, if all truth be told. So, by rights, a true reflection this year should surely be a target. That only keeps pace with last yr and to move forward, you need to exceed that figure. From all that I have read that seems to have been missed by many investors, or at least, I have got that wrong.
For me, right now, you jump too early, you could be stung next yr with a raise (I accept that's my opinion - not yours). But if you don't take the plunge and a contract lands. You're stuffed and have missed the boat.
You have got to love aim!
My opinion though on the
HM you are spot on, the tech will not last forever and a large contract (or cash flow) certainly assists in accelerating RnD which is an ongoing priority for every tech company
The positives are as follows:-
- Quality clients, why is this important? Simply put, so you can be sure you will be paid and on time - also deep pockets
- Sales team, as mentioned Cargo Signal and Bosch certainly help boost STARCOM sales efforts and reduce money/time spent marketing
Negatives:-
- Very slow increase in revenue, why?
- Tech that can become outdated / lots of new competition
That's why YES I will be happy with 6.7m as I believe only Zero has really contributed to the bottom line this annum, whereas next year we (fingers crossed, it could be near the end of this year) more from CropX, Bosch, Cargo Signal etc. and the other partners
There could certainly be a huge acceleration in growth here, with the referrals and references they now have (before it was unknown companies, now it really is the best of the best) but the bottom line is the time to act was April 2019 when we raised 650K - only in January will everybody see if this has truly paid off
I aim for 6.7m as that is forecasted, however the market would love 7m+ - because there is certainly a very good investment case for 2020, but it needs backing up with a solid 2019 first
Sp2 thanks for the response. I got the q1 raise from myles, whom I believe, bought shares in a raise . Recently he suggested that they were good for cash until q1. Then looking historically, that seemed to fit. I also noted the new approvals of late, with Russia and airlines. All is very good indeed, but until that materialises on the bottom line, I don't see a reversal in sp. I've read a lot about, we should be this mcap or that. I like to like to look at why are they at X or y. Incidentally, with the recent new approvals, we simply don't know know paid for that, obviously vigorous tests were conducted (especially for the airline), so we simply don't know the current cash burn, but something to consider at least. I also noted that there was an overdraft facility that was drawn on, so would have needed paying
I do reiterate in the strongest terms, I like the tech, how it is being sold is my concern and how long will it be before before the they truly turn the corner. Could be tomorrow, could be longer, no one knows.
I've recently read back to the £1.1mln contract at the start of the year. This is interesting as it looks like it should have been in the previous year account, which would have made last year £7+mln for the year. As it's gone into this year's accounts, I would expect £10mln+ with the added funds from last year to make progress yoy in reality. Just something I noted
It's a massively transitioning sector and a hot market right now, which is why star has come onto my radar, the tech all these companies have at any one time has a short self life (like the padlock), so unless at each stage of development big contracts are signed, it's difficult to have the cashflow to develop yourself without the raise. This is what I note and what is stopping me from investing right. I wondered how rational holders respond to this?
CB - agree, which is why I quoted cash statement in addition to profit. If they are spending it they can't hide it in the cashflow statement.
The operating loss for H1 was still roughly the same as the OL for H1 2018, however as I pointed out at the time there was around a $170K swing in exchange rate differences etc. so the actual figure, had we been fortunate with exchange rates would have been around $300K - when cash is tight, this is something to monitor, USD vs Shekel has been coming down in H2 so I expect this to be managed somewhat further
They've also cut salaries for H2 as they clearly believe this is a period of growth, which should again take this down further, even 200K off the bottom line, should ensure STARCOM do not need to place at least in 2019 - by that time we get the results for H2/Full Year and we know more - the risk here is placing before results, if they place after results, it could be for a number of reasons, for a big order or possibly more positive, with II's like FLX did back in December 2018 at no discount to the SP
If the higher margin products continue to sell and they do bring in more revenue in H2 than H1 (target 3.7m for H2 giving a 6.7m year total) then again, this operating loss comes down and the EBITDA goes up
Personally as a LTH from 2017 here I just want to see top line growth, at least 6.7m IMO but ideally more than 7m because that shows a real acceleration, that will also be two full years of growth back to back, with more quality clients and better products in the bag, this should give outside investors confidence the company has fully turned that corner and is on an upwards trajectory
Of course a large one off order does all of this for you, but ultimately you want multiple revenue streams contributing to the bottom line, rather than just relying on one (and possibly having to find cash to fulfil it)
My Two Cents :)
You need to remember though that from a funding perspective profit and cashflow are two different things. As as tech business, a lot of the development costs will be capitalised, so won't hit P&L until amortised.
Hunky, I disagree a raise is inevitable - in fact I would say it is unlikely.
In H1 Starcom did create cash during the period from operating activities (a massive plus IMHO) and R&D costs are quite low (less than £100k) as I think existing products are tweaked/updated rather than rebuilt.
They has c£500k cash at end of H1 and H2 should/will generated their first full year profit (c£250k I think).
So unless something unexpected happens I think cash is ok (IMHO!!)
The issue is, r&d developing bespoke products for relatively low sales. So because star have never landed anything significant, I mean multiple millions, they are caught in a perpetual cycle of not landing contracts, always having r&d costs, then having to capital raise to continue. It all changes with a big contract, but they are good for cash until q1 2020. So essentially this is a gamble now, the gamble is, can they land a big contract to give them to cash reserves they need Vs the inevitable raise should they not. For parity, there will be a huge rerate should they be successful.
Agree RM very frustrating to see the SP down here, but the MCAP of the company is now so low that any positivity should send it northwards pretty quickly
For anyone concerned about the STAR sales (and teams for that matter) we now have Cargo Signal (Tetis) and Bosch (Kylos) and Zero MC (Helios TT) selling the products
PR and sales team are lacking in my view! Tech and the key people are world class and I do think we'll come good in the medium term
I do think some of the equipment is definitely unique and there is definitely a large market for rail and air freight products, whether unique or not. The fact that Starcom has a number of major customers is surely a positive indication that the products are needed and are top class. Some of these deals appear to be quite small though so it is repeat orders that will make the big difference.
Other relationships such as Zero are clearly in the early stages, but I would be surprised if we are not charging the manufacturer an upfront amount for each unit fitted.
Agree PR is a major issue and also being a small company lack of a good salesforce, however, revenues are growing and we should make a positive PBT for the first time so momentum is building, unfortunately not in the share price.
Hopefully a little positivity and things should change. Company currently valued at £4m - less than last year's annual revenue
I don't think the company location / background is an issue at all. in fact it may be a positive for certain markets, such as the US. The larger issue is, as you say, our IR team have no clue how to spin a positive RNS>.
The equipment that Starcom offers is not unique and a lot of possible customers probably won't deal with an Israeli company.
Bosch , zero , fed up hearing how many deals being done.
The fact is we only ever get negative rns .
This needs some decent pr or even some pr .