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Agree with all that Terry.
The price point was the only negative thing I heard yesterday. That winds me up a bit as I think it's worth much more than that. However once you deal with less tier 1s and bigger volumes, discounts become expected.
He said to me that 7 dollars was the basic rate for the 2026 RFQs that they were currently going through. But they then charge extra for each feature required.
So that adds a few dollars.
One final thing about the Mirror.
Yesterday Paul stated that it was currently suited to about 50% of models.
He then went on to say that it should take 50% of the market. He then realized what he had said and corrected that to 40%. He is very wary of over promising following the imminent debarcle.
However basically what he was saying is that every OEM who can choose the mirror will chose the mirror.
Why is that?
Well he explained that the first decision they need to make is where to site the camera. If they don't go with the mirror, they will need to put it in their console/****pit. That will require a complete redesign of the console, and all that goes with that. Manufacturing changes etc. It's very expensive.
Why do that when you can just buy a slightly dearer mirror.
So where it's possible to use the mirror it is a no brainer for them.
Magna also know this and why they have invested in us.
Previously Paul has been hopeful of winning 40% market share, 50% market revenue. Well seems to me this gives us 50% market share in one hit.
I'd also bet there is a team working on solving the technical issues for the other 50% right now.
The mirror is looking more and more like the killer app ????
Cheers
Ok as we are answering questions, here's want I don't fully understand, hopefully someone can answer.
Lets say GM go down the Qualcomm route and because they have supercruise they need DMS.
Lets say they also choose to use the Magna mirror.
Do they need the DMS module supplied with Qualcomm, or can they get away with just using the software in the mirror?
My gut feel is that they don't need our Qualcomm DMS functions, however this description of the mirror as just sending DMS signals slightly confuses the issue a little.
Dan,
As I understand it there is no conflict with Qualcom. I believe Paul stated that yesterday.
I still have one or two things I don't fully understand 're all The technical solutions. But this is what I think.
The mirror holds the camera and Sees chip, and becomes the piece of kit which provides the signals to all things which need them.
As I said before we offer 50 features, so at least 50 signals.
They played a video yesterday which showed a car with 4 passengers and it displayed the signals being monitored and potentially sent.
So things from, distraction, mobile phone use, seat belt use, to whether the person was smoking.
All these signals can be used by other ADAS functions.
Qualcomm provide snapdragon, which is in effect a central processing unit which can house all these ADAS functions and the infotainment features.
It can also support Sees DMS software.
Qualcomm don't care if someone uses the mirror or the See solution on snapdragon. All they want is too sell their unit into OEMs, which they appear to be doing great with.
So if I learnt one thing yesterday, it was that the Magna mirror is much more important to us than Qualcomm.
Also any significant Qualcomm revenue is further out than Magna.
Hope that helps. Please correct any inaccuracies, we are all learning here.
Cheers
Some other stuff either from meeting or conversation with Paul after.
Costs
Over 100 engineers taken on recently. Done in a cost-effective way (ie 17 in Vietnam, where labour rates are $35 against $135 in Aus). All bedded in and working well.
They saw what was coming and took decision to scale up to meet expected demand.
He said competitors have plans/would need to do a similar thing, but you can’t do these things overnight, and just click a switch. They will also have the issues re the cost of this, it’s unlikely they can do it as cost efficiently. Plus, they will likely need a fund-raise to enable this, and there is no certainty of that.
They are actively reducing the number of Tier 1’s they work with. This is another cost saving measure and has little effect on sales. When they started and had no industry reputation, and they had no choice but to go for all the tier 1’s. Now they can be much more selective about who they deal with
NDA’s
He confirmed to me that they were still not able to name many models, due to NDA’s.
They are not trying to go under the radar, as some have suggested, and would love to name them.
When I said we had been led to believe that once model was on the road, they could be announced, he said that isn’t always the case. Some have X quarters after hitting road in the NDA.
The obvious one is definitely in that category.
Auto DMS market (my thoughts after talking to Paul)
Will be about 80 million units a year by 2029. If we assume $10 a pop, and we have 50%, that’s $400m revenue. At 90% margin that’s $370m profit.
Using a PER of 10 to 15, gives a market cap of? (I’ll leave you to do the maths)
But it is multiples of current price.
They now offer 50 additional features over the basic offering and charge extra per feature.
Features will increase year on year.
My Magna take away from the town hall
Magna
Great deal
Exclusivity – This was the only exclusive deal they would consider in Auto due to following.
Its location based, and only ties them down from going with other mirror manufacturers, of which there is only one other. They were unlikely to have done business with them anyway.
So presents no restrictions.
It’s only for 3 years.
Magna had no real NEED to do this deal, as they would likely have been the dominate supplier anyway using See’s software.
Not sure we will know why they felt the need, but from what he said, my best guess is that the solution is worth very big money to them.
The Mirror itself will be at least 7 times more revenue to them than to us. Yet the only thing that differentiates this from other mirrors, is the fact that our software can be deployed in this small space. So we are key to their Mirror.
So, whilst this seems a lot of money to us, it’s small beer to them, and guarantees a massive revenue stream. There is also a deep relationship between the 2 companies.
I’d guess if the 2 had fallen out and SEE stopped providing the software, a great revenue stream would have been lost to Magna. Unlikely, but this deal protects all that for them.
So, it seems to me that SEE have given away virtually nothing commercially, I’d see this as almost free money, and a better deal than it seemed yesterday.
Would have been Impossible to raise money in market at these rates if at all.
Bond conversion at 11p is quite remarkable in current market.
Paul stated that he felt the Mirror solution would be the dominate solution to host the camera.
Because it was the simplest and cheapest by far.
Expects possibly 50% of all near future deployments to use this method. Thats fantastic for us.
Currently some car models are such that their shape/build means the Mirror is not a good solution. Hence only 50%. However, they think that technical issue, will get solved over time.
Which would mean 50% is no longer the limit.
Hope this is useful. Please correct anything above if I've got it wrong.
Phil,
I don't think Magna have a choice, they have to convert. The only part that is not is the interest, which see decide whether to pay or convert.
I accept your point about giving away the mirror.
But the more I look at it, I think it's a very good deal.
Biggest downside is,as you say, that others will need to find a way of getting a mirror to work, and that produces competition.
However I suspect there isn't time for that and Magna know that and have got a cracking dea.
I'll reserve judgement until tomorrow.
Clearly the exclusivity deal is excellent.
However given they were already funded and getting another 17m from that deal, why did they Need more and incur further dilution, and significant interest payments.
Seems the key question tomorrow for me.
Not sure when you found it to be like that, but is definitely variable now.
Gets updated twice a day, and I try to collate all the evening updates.
By taking the highest km daily value around the time they announce latest installs and dividing the 2, you get a km per install figure.
Use that against any future daily km reading to get rough number of installs.
Need to only use the same days of the week you obtained the original figure from.
Wednesday and Thursday are the busy and most consistent days, as they also tend to avoid bank holidays.
I beg to differ, but I think you'll find you can.
If you plot the daily mileage totals, and divide by the last calculated average daily mileage per truck.
Not perfect, but provides a reasonable indicator of current Fleet installs.
Wouldn't get over excited about that increase.
Mileage increase suggests that we have a Fleet increase of 1500 in the last 3 months.
We should expect around 2600 if matching previous periods, before the supply issues.
So Fleet is still under performing. Although that's not that surprising.
Assuming that article is correct I'm very surprised that we are in 440,000 cars but only 40,000 GM cars. I'd have expected to have been in many more.
Makes me realize how little we know, as to where those 440,000 are actually installed.
Glandore,
Like you I am currently assuming nothing extra for BDMs or Aviation, as it's all too unclear. at this stage
It's pretty difficult to model future revenues, when unit numbers are so unclear.
However I have break even mid way through Financial year 2024, e.g. December 2024.
Where we differ on figures is the following.
I'm less optimistic than you re Fleet. It's been a serial under performer, in terms of revenue increases in virtually every year.
The reason for this is that there is only 2 ways for revenue to increase.
1. Sell more units than last year.
2. Get the units installed, so that incremental recurring monitoring revenue can begin.
In the case of 1, the increases have been small year on year.
In the case of 2 we suffer from extremely slow install rates (average 6 months). Not the companies fault, but still something which results in less and slower revenue streams.
In addition we suffer from a 2% churn rate . So need 2% to stay still.
As a result I have only assumed a AUD $9.5 increase from now until end 2024. Over 4m less than you.
*note Not sure how many spotted this but Fleet revenue actually went down this year by some $2m, as a result of the supply issues. They said the supply issue cost them 3.5m in delayed revenue. So assuming that had been recognized, revenue for Fleet would have been a $1,5m increase from previous year.
However re Auto I'm much more optimistic than you.
For 2023 I'm expecting 1M units sold
For 2024 I'm expecting 3.2m units sold.
So in 2024 that should be an addition $42m in revenue.
I've increased costs for 2024 by $2m . So make that $40.
Now those auto unit figures could be overly optimistic, but they were taken from a company presentation late last year.
Just after the Magna deal was announced.
So I hope I have got that right.
Paul has been saying 100% auto unit increase year on year for some time now. I'm fairly sure he knows it's much greater than that, but is being conservation for now.
Can't remember what our market share is predicted to be off the top of my head, but I'm sure over 40m is a rough figure by 2028.
Well you cant get to that figure from the 318,000 of 2022, just increasing at 100% year on year. So there will be some big jumps along the way.
2024 will be one of those.
Cheers
Soul,
There was nothing in that update which wasn't already conveyed at the results presentation or other earlier presentations.
They need to say something new to excite the share price.
Only people being impressed, are those that didn't watch those, or were asleep.
Great numbers, but significant cost headwinds approaching.
Lacks detail on how much those costs will be.
Fixed electricity contract ended June 2022. So incurring costs now.
I'm torn here until I can from an opinion on exactly how high those costs will be.