The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
The only major stumbling block I see it the probability of another cash raise being required.
H1 cash burn was A$23.1m (up 71% from previous H1 13.5m).
Cash on hand 31 Dec 21 was A$79 m so end of June could see it down to A$ 55m or thereabouts - 14 months at H1 cash burn rate.
Given the increased investment in people and the delays in SOP due to covid supply chain issues it seems unavoidable that they will need to raise more funds - either through Share issue or other mechanism in the next 6 to 12 months.
The cash figure at 30 June will be critical to see if H1 was the high point in cash burn or if it continued at the same rate or higher during Q2.
No argument the numbers will increase Terry.
I just do not see Revenue being at US$500m (a la Mobileye 2017) in 2/3 years.
At the moment they are getting approx A$350 per vehicle per annum in monitoring fees for Fleet and around A$1400 Hardware/Installation, and I estimate approx A$16 per vehicle in DMS License for each Car sold with DMS though it is a bit early to be precise with that one.
(Caterpillar is pretty irrelevant - approx A$4m pa.)
You can work out some combinations of each to get to US$500m.(A$ 700m approx).
(The numbers above are based on the info in the last three financial statements - two 6 monthly, one annual)
" £1 is great but in 2 /3 Years, why shouldn't we be worth at least what Mobileye was in 2017. Similar market share, similar turnover etc "
Mobileye Annual turnover run rate in 2017 was US$ 500m with Annual net income(profit) run rate of US$ 130m. (from the Q1 accounts).
Let's hope we reach those numbers in 2 - 3 years as you suggest.
" £1 is great but in 2 /3 Years, why shouldn't we be worth at least what Mobileye was in 2017. Similar market share, similar turnover etc "
The biggest difference I see is the revenue per vehicle - In 2017 for Mobilieye it was US$45 per unit per their accounts.
I think he said the number of cars with SEE DMS would double each year which is a lot different. Current annual DMS license revenue is ?. I don’t recall the revenue doubling every six months comment but happy to be pointed to it.
In ways you are probably correct KBW101 - but as an emerging technology it could not possibly be good enough for all emerging uses at this early stage.
Like all technology innovators they have a choice of developing, buying or licensing to keep moving forward.
I think the RNS is pretty neutral as of now - they have chosen an optics technology which they think will help keep them at the forefront of the race. Only time will tell if they have chosen well.
Given their technology record the odds are the choice works. If only their Fleet execution over the years was as good we would be in a much happier place.
I'm guessing this paragraph will dampen some investments for a while....
All good in the long term but getting longer it seems.
? Engineering costs rising to support programmes: Seeing Machines customers want to add a broad array of features and to supplement the core functions, and so Seeing Machines is having to invest in significant engineering capacity to support these them. We are now forecasting a higher EBITDA loss and cash burn over the next few years, which we believe can be supported by the recent A$55m net fund raise without the need for further equity financing.
Buffettology, how did you calculate this number ?
It seems a tad high -
Worldwide light-vehicle sales are not forecast to exceed 90-100m.
Paul says they will win materially higher than 30% of current RFQ's.
But it will be years / a decade before DMS willl be in in even 50% of worlwide production imho.
Great news today - but lets keep it in perspective....
Cheers oldfool......
Yes all good vibes in that interview. Great to hear.
Re margins - yes as they continue to direct sell margins should increase in fleet as stated.
The promised increase in margins in Auto is equally excellent news.
DR777, If you mean why is the figure a loss (rather than a profit) it is because it is in brackets.
If you are questioning how accurate it is to say EBITDA = LOSS then loss will be greater than EBITDA but the difference (Tax Depreciation and Amortisation) is probably not very material for SEE.
Brock - Recurring revenues are not just Fleet monthly fees. It also includes Caterpillar.
Hi OldFool, you possibly know me as Unionhall from ADVFN and yes I have been invested for much longer than 8 years.
I am still invested as I expect to double my money in two years. Perhaps more, perhaps sooner. 50% start in 2020 would not be bad.
The numbers I posted as I said in my original post are indicative. Anyone can change any of the parameters to get different results. By my nature I take a cautious approach.
I also noted I hoped Fleet would do well in the near future following the shell news.
Cheers slider, you are quite correct the Figure for Fy21 was approx A$19 per vehicle.
This was for the first year, low volume and only for top-end vehicles.
If you move to slide 11 on the results presentation of Nov 24th where Paul discusses the eight RFQ's for A$1.1bn a quick check will show this covers approx 97m vehicles. So already the Revenue per vehicle is down to approx A$11 per vehicle.
The kicker is that Paul very clearly states that these RFQ's already include the "40 extra features".
Within that slide he identifies the Magna RFQ "the black bars" and as far as I can recall I roughly calculated the Revenue per vehicle for that RFQ as A$8 per vehicle.
So price erosion is already evident - I don't know how far it will go or will it be impacted by getting into the "Volume" market but it is something to bear in mind.
Seeing2020 correctly points out that See is in one of the highest selling vehicles in the US. I presume he means the F150. He neglected to mention however that as of now it is only in the top of the range models - perhaps 20% of the overall volume.
As I said seeing2020 - just change any of the numbers to reflect your views.
The formula gives people the wherewithal to calculate a figure rather than just a finger in the air job.
For what its worth I think I am a bit negative on the per vehicle revenue, but then I think 30m vehicles and a 70% net margin may be overly optimistic. Thank goodness I didn't apply tax to the net revenue like I should have. That would really have set the cat among the pigeons.
On the theme of calling out such misleading posts - pity you missed terrym's factor of 10 error (on the upside) in his comparison with Ambarella.... your new year's resolution slipped a bit there.
Considering you were also a factor of 10 out in your forecast for end 2021 SP I think it behoves you to be a bit more generous when investors genuinely try to add light to the almost impenetrable future....
Absolutely Brockwl, It has been mentioned before but I think the current revenue per vehicle for RFQ's won was approx A$8. That is for reasonably premium platforms I believe.
My estimate - purely unscientific but based on the same thought pattern as yours - is that to crack the "Volume" market revenue per vehicle may be about A$4.
If SEE get 40% share (Excluding China) that represents approx 30m vehicles by about 2026/7/8.
30m x A$4 x 70% margin x .53 Exchange Rate = STG45m profit per year.
P/e ratio of 10 for mature volumes gives a market cap of Stg 450m - roughly where we are today.
(Change any of the numbers used above to change the outlook....they are just indicative)
I have long been of the opinion we need Guardian to kick in and equal Auto for the company to reach its potential. So far Guardian has been a serial disappointment with glacial growth over many years. Lets hope for better things to follow the recent excellent Shell news.
I do not expect Aviation to contribute significantly before 2030. The cycles there are even longer than Auto/Fleet.