Member Info for Brockwl

As a long-term holder, who first bought 10 or more years ago, it’s clear that a great deal of the 100 bag potential it had then, has probably gone for now.

It’s funny how investors can get carried away with certain shares. I can remember first buying when all they had was Fleet. No mention of Auto, and Fleet alone was going to make this share 100 bag, and I bought in to that story.

Crazy now when you look at where Fleet is now, and goes to show how easy it is to be seduced by story stocks, and just how hard it is to predict these things. We should all be millionaires just on Fleet revenue alone, but it hasn’t turned out like that.

However. the recent Auto KPI’s alongside management confidence, and predictions on taking $6 cost out of the company, has provided a level of certainty, that hasn’t previously existed.

Break-even during FY 2025 seems a very likely scenario now, and if Auto does double as predicted, I expect FY 2025 to show a small profit, possibly $10m.

FY 2026 should see a profit of $38m, and would suggest a minimum share price of 7.5p, based on market cap = 10 * profit. However, that just values the company on earnings, as if it has no growth potential, so price should be north of that.

2027 and 2028 should see $91m and $205m profit respectively, suggesting share prices of 21p and 49p, based on earnings alone.

The above includes nothing for Aviation other than what is already known and Fleet continuing to grow at the same pace, as if G2 continues and G3 Aftermarket provides little benefit.

Given the level of certainty, that appears to now exist, now seems to be as good a time to buy, as there ever has been. Little chance of losing money, and good chance of a 10 bagger in 3 to 4 years.

Whereas 10 years ago with a 100 bag possibility, there was every chance of losing all your money.

Lots could still go wrong, but apart from a black swan type event, even if they have over promised again, a 5 bagger should still be extremely likely from here.

S2020,

Depends how you read or measure 100% growth, they have never been particularly exact on that.

Unlike you I look at 2023 numbers only and expect that to double in 2024

So in 2023 FY we did 638951, so in 2024 I expected double that ie 1.28m roughly.

This also correlated with some of the graphs they showed in various presentations.

You seem to be using total cars on road as your yardstick, and doubling that.

As I've said before cars on road is a pretty meaningless stat, and I ignore it completely. It's doesn't give you any idea of whether proper growth is occurring.

They will eventually drop this stat as the growth rate only looks good in the early years .

At last, some half decent numbers. Which is a big relief after the Auto stagnation for the last 2 quarters.

Whilst I’m very pleased with these numbers, we shouldn’t forget that at the beginning of the year the forecasts were for 1.25m cars for the year and we are now only at 744k for the first 9 months. So still need another stonking quarter to be fully back on track.

However, it does look like the predicted growth from BMW and VW is now in progress, and we should see these numbers continue to increase at a decent rate.

Fleet numbers were also OK, ticking along at about 10K increase a year.

I was a little disappointed with the share price action. Given the recent fall, I felt these numbers were worth at least a 20% rise today, but we only got 10%.

Hopefully this will continue to rise over the next few days, as new investors see the potential, and existing investors accumulate more at these prices.

At this price I am now a buyer when funds permit.

I can't mention every figure, when I post. I was responding to someone who felt 220k auto a quarter was enough to get to break even, which I don't believe is enough, and explained why. They had made some effort to suggest an outcome , so thought they deserved a response on what they may have missed.

I don't believe I'm particularly negative, just looking for a balanced view.

I've listened to all the presentations, and have not heard Martin say $6m annual cost savings next year.

Did he actually say that or is that you coming to a conclusion from other stuff he said? and where was this said?

Be nice if true, and is genuine cost savings such as staff costs, rather than inventory costs.

S2020,

You say " My workings are $10m/ 3 + 1 year of tha additional Collins income from the RNS below. Hence the additional $5m.

Perhaps you could share your workings for no increase in Aviation?"

Firstly, I didn't say at any point, that there was no increase in Aviation. You have just made that up.

I really wish you wouldn’t do stuff like that as you lose all credibility, and shows your contempt, for anyone trying to be realistic rather than dancing to your daily ramp.

As for aviation revenue in 2025 I’ve worked it out the same as you but come out with the correct answer rather than your inflated figure of $5m+

By your own figures and the one’s I used, aviation will be $10/3 + $2.65m/2 = $4.655m.

Which isn’t $5m+

First rule of investing, never inflate figures, unless company has repeatedly shown that they beat estimates. Certainly not the case here so far.

There was 750k aviation revenue in 2023.

The Colins license revenue is 10m spread over 3 years, so not sure how you expect 5m+ in 2024.

"For completeness, we had zero Aviation license revenue in FY23, based on the 2 Collins RNS we should have $5m+ in FY24."

Another over -estimmation

Bonzo,

You seem to have forgotten the 11.5m of magna licence revenue which was in 2023. 2025 only sees 3.75m from magna. That's quite a shortfall to make up.

220,000 won't cut it from auto. Needs to be 300k minimum.

Baxter,

Your ironic wit is wasted here, try the telegram group, they won't even spot the irony.

Trouble is it's not 70m a year, as there is a lot of ramp up there, so will start low and ramp up.

Hence break-even not guaranteed.

It's becoming clear that see misjudged the market, in thinking that best product would dominate.

As a result probably spent far too much on R and D.

In the short term that hasn't worked well for them, as they are often only used in premium brands, and missing the volume budget market. In addition OEM delays have exacerbated that strategy.

It's not all bad as that strategy has had positives ie magna and big lead in aviation.

If they can make breakeven without another raise, then over time they can move down the chain into the volume budget area and do well. Hopefully before smarteye catch up. But I dont see them out of the woods yet.

Useful contract today adding 3m a year for some time starting eoy.

Noticed Paul scot stockopedia has turned more positive on see recently. He's been pretty critical previously.

It appears he had a call with management which changed his mind somewhat.

However he does caveat that with, only if what management say turns out to come true.

I'm currently just a hold until I see the KPIs improve. Then I might buy more again.

That should say 1m a month in last quarter to be correct.

Trouble is it's all based on revenue forecasts being met, and particularly auto revenue.

They haven't got any where near that for the last 2 quarters, so I'll take it with a pinch of salt until I see it.

Despite him saying that he hasn't bought any for quite sometime despite the price being a bargain.

When I see him put his hand in his pocket again I might become a believer.

2 million by End of June will actually be rather poor. We are already over 1.5m, which only suggests less than another 0.5 million, showing quite poor growth.

I thought the next 2 KPIs were supposed to be awesome given BMW and VW are joining the party. If that's the case it will be another Auto revenue miss, and breakeven pushed back further.

Sorry the price in pence was miscalulated previously. It should be:-

The previous didn't format very well. So hopefully this is clearer

PER --------Price in Cent --------------Price in Pence

10 --------- 10 -----------------------------7.9p

15 ---------15 -----------------------------11.34p

20 ---------20 -----------------------------15.8p

The above is 2026 expectations. If these are met, plus new contracts appear, I'd expect profit to double each year.

Share price would obviously increase in a similar fashion providing growth projections (ie visibility via future contracts ), continues. Without the growth ( ie new contracts) the PER associated with the stock will reduce.

So getting to 15.8p is possible on hitting 2026 forecasts.

Then profits doubling in 2027 and 2028 would normally see the share price also double. However without the visibility of future growth the PER would drop back to 10 from 20 and you stay at 15.8p.

All sorts of variables in there. It won't work out like that, but that's the theory

The previous didn't format very well. So hopefully this is clearer

PER --------Price in Cent --------------Price in Pence

10 --------- 10 -----------------------------7.9p

15 ---------15 -----------------------------15.8p

20 ---------20 -----------------------------23.7p

Micky,

I have a model which breaks down the various revenues and costs in the same manner that the results are produced. I'm happy to share headline numbers, as not sure I could handle the formatting here for the full figures.

It comes with a number of caveats.

1. Revenue assumes Auto to meet predicted forecasts.

Note this hasn’t happened in any year to date and future forecasts are always revised downwards after release of latest figures.

The last 2 Quarters were zero growth and the next 2 need to be exceptional to make up the difference. So, another downgrade is highly likely.

2. It contains nothing for aviation other than the Collins licence payment.

3. It contains nothing for OEM NRE and Hardware installs, which historically have been about $7m

4. It assumes a reduction in costs of $4m, which given inflation is currently 5% may be optimistic.

However, they are guiding on costs falling after this year, and is balanced out by no NRE above.

5. I have included nothing for After Manufacture, but have assumed Fleet to have above average years for 25 and 26.

Revenue Profit/(Loss)

2024 $62m ($9m)

2025 $83m $15m

2026 $120m $52m

Currently the company has repeatedly guide $125m revenue in 2026, but as they have never hit a target yet, I’m happy to leave it at $120m.

Market cap is currently £227m using 5p at share. Which is $286m

Assuming the Magna convertible happens with interest in shares, there will be roughly 4.55b shares.

In 2026 $52m profit (Lets use $4.5.5m, because to date they always under deliver, tax is unknown, and it makes the math easy. Gives an eps of 1 cent.

Using various PERs, take your pick.

PER Price in Cent Price in Pence

10 10 7.9p

15 15 15.8p

20 20 23.7p

Years 2027 and 2028 should see profit double each year from 2026’s figure.

If they can hit the revenue and profit figures above through 2025 and 2026, and it’s a big if, plus we see future contracts materialise then a PER of 20 would seem very reasonable.

However, if they continue to over promise and under deliver then expect a PER of 10 going forward.

I can still see potential for a 50p share price in 2027/2028, but I can also see much which could derail or delay that.

Also my figures show a $15m profit in 2025, the company only talks about reaching cash flow breakeven in 2025, so that worries me a little. It could still mean they do actually make a profit, if the cash flow breakeven occurs early in year.. But they are being quite vague here and leaving plenty of wriggle room.

Glandore,

Completely agree with that view. I'm viewing Paul's purchase in much the same way, ie he thinks he can make money at these prices, but his options are unlikely to produce anything meaningful.

So we might double or triple at some point, but the multi bag dream of 10x

Has disappeared from the horizon.

The biggest contradiction I could see in the presentation was the statements re cash burn.

Martin stated H1 averaged $4m per month, and expects/hopes FY to finish at $1m per month.

He didn’t state the current monthly cash burn.

However we know we have $22.2m left and they expect that to be $15m after H2. That suggests they expect to burn $7.2m in 6 months, so an average of $1.2m per month.

I’m having trouble seeing how that is possible unless we are already close to the $1.2m a month average burn. If that’s the case and we are at those levels why not state that, and if we are not and we are at $3m, then how can you average $1.2m, when the final month will be $1m at best.

Basically, I’m very sceptical, about these figures and can see the cash figure going down to anything from $5m to $12m at FY results.

Not only does this take them to the wire, but it makes inventory management tricky. If by chance they got a big G3 or Fleet order, they would struggle with cash flow to meet it.

On a positive, I was quite pleased that Paul clarified the guaranteed 1/3rd minimum order comment, which completely mislead investors here at the last presentation, myself included.

Something that was taken as a negative and a bit of a shock, has been clarified and can now be seen as a positive. It’s basically an insurance policy to force anyone who walks away from the contract below SOP to pay 1/3rd of the contract for the privilege.

Dream,

Very good post, I enjoyed reading that.

I think we are broadly on the same page, although rather than inline, my take is that it was below that, but glossed up to make it seem inline. They are hoping that the extra cost cutting they have had to implement in the 2nd half will bring the yearly update back to inline. They are also banking on this 40% – 60% H2 weighting happening as well. Although I don’t see it as H1 to H2 weighting, in the normal sense. I see it as expected growth.

Apologies to those who are strong bulls of the company, for the fact that I mainly post on the negatives that I see. But there is a reason for that.

I run a fairly concentrated portfolio, and can't really afford for any of the 5 or so big positions I hold to go belly up.

Having built a sizable investment in SEE over the years, I've watched it go from amazing potential to average potential, ie from potential 30 bagger to possible 4 bagger.

The company has achieved many excellent things, but for various reasons (mainly delays outside of its control), it has taken much longer to get to profitability than ever imagined. When you look back, it’s amazing they have got this far, and it’s probably only the Magna and Collins deals which have kept them going financially, and with some potential left.

That alone tells you how easy it would have been to go belly up, or back out to the market for more money and leaving existing investors with little upside.

When I first invested here, I only looked at the potential upside case. Now after all these years and a much bigger stake, I tend to spend much more time researching the downside and stress testing the investment.

I ignore most of Paul’s hopes and promises, and look for contradictions in what management say and what the figures tell you. Paul will always put some spin on it, as any MD would do, but there is a line that shouldn’t be crossed in doing that, and I’m checking for that continually.

It’s not that hard to present numbers in such a way, as to make things look better than they are. Especially when you are under pressure to deliver, and believe that if you could buy a little more time, it will all come good.

I’ve had some experience of this and know the temptations.

Paul was pretty honest about investors being unhappy about the share price, and looked to me to be under a degree of pressure regarding this.

Terry,

Don't know where you got those numbers but they are wrong. Just looking at cash position in your extract it says cash position of $26.1m at end of FY24, ie June 2024.

Today's presentation has Martin's first slide showing cash position at Dec 2023 at $22.2m and he goes on to say Mid teens by June 2024.

No idea where you got those numbers, but suggest you watch the presentation for the real figures.

The stand out for me is that the cash burn has continued to be above projections, and that seems to stem from Auto revenue being lighter than expected, due to various delays and other unknowns.

To address this, they seem to have decided to cut costs far more aggressively than anticipated in H2, to try to make up the difference.

They now suggest that cash in hand will be in “mid-teens millions” by end June 24. So, we have to assume $15m left by then.

Which should be just enough for cash flow breakeven in 2025, but things are tighter than was envisaged 12 months ago.

Given by their own admission, they don’t fully understand last quarter’s drop in revenue, the worry would be that Auto revenue continues to be lighter than expectations.

Clearly its good that they have the scope to cut costs, to recover lost revenue, but it looks like they now have played that card.

So, what happens if revenue continues to be lighter than expected?

Another discounted raise?

The next KPI’s have suddenly become even more significant.

I saw someone suggest that they expect directors to start buying again now that the close period restrictions have finished. Love to see it, as it might provide me some reassurance, but I suspect its very unlikely.

However if and when it does happen, it would suggest things are back on track.