Info from meeting with Simigon14 Apr 2017 15:07
From advfn
Daz14 Apr '17 - 13:08 - 473 of 473 0 0
I attended a company presentation yesterday and found it very useful, here's a summary. Hopefully it will be of interest.
The company is transitioning to a Software as a service (Saas) model, with 57% of revenues now coming from this source and which will increase further as a percentage this year. The order book stands at $23m, spread over a number of years and this provides substantial visibility of revenues both for this year and guarantees they will be profitable this year.
Simulated learning is likely to grow significantly over the next 5 years as the Y and Z generation enter employment and it becomes more and more the norm, so the market opportunity for Simigon in the medium term is substantial.
Learning by doing is also the most effective way to learn.
Although the company has traditionally focused on military aviation, where there is a need to train pilots before they actually fly an aircraft, there are also other industries like oil and gas and crane operation where training for critical scenarios is vital and so there are many opportunities and they are working with resellers to expand these markets as being a small company, they don’t have the capability to do it themselves.
The account receivables of $2.9m is due to the a number of factors :- the transition to the Saas model and the large contracts, a substantial amount of this has been collected since the year end. Cash flow was similarly affected and there should be an inflow this year.
I came away thinking that given most of the market cap is covered by cash, there is a substantial opportunity here. Yes, the large contracts are going to be lumpy and unpredictable but the forecasts are conservative and don’t make allowance for any wins over the next few years.
Given also that they have a substantial order book and a high level of visible recurring revenues, there is also not much risk and so you can play the long game and if they do gain the expected traction in new markets, then the price ought to substantially higher in a few years time.