re reminder while we wait12 Nov 2017 14:39
research note 2017 to 2018 ....posted by KAL...2 WEEKS AGO
Shares could be due for a re-rating, with the potential for a warrant related cash boost
Strat Aero has certainly had its share of troubles as a quoted company. But under the new management team clear progress has been made towards the key event of the business reaching break-even on an operational basis. With a streamlined focus on the two areas of UAV surveying and training, combined with the recent fundraisings and efforts to reduce the cost base, we believe the potential to break-even now looks like a having a reasonable probability of happening in the near-term.
We see 2017 as being a much better year for Strat Aero as a number of factors converge to deliver the most positive financial results to date. We expect momentum in growth at the top line to continue as Geocurve benefits from contributions from the TEAM2100 project and as the training business enjoys growth in income as the company�s partners further roll out programmes across Asia. Combined with a continuation of cost reductions, at both the operational and corporate level, we see the business breaking even at the operating profit level by the end of the year in an optimistic scenario.
Based on recent discussions with management and analysis of the accounts, our own numbers envisage a worst case scenario of a loss of c.$1.07 million for 2017. Crucially, this implies that the recent funds raised should be sufficient to take the company through to the end of the current year.
Into 2018 things become a lot more interesting from an investment point of view if the growth momentum and tight management of costs can be maintained. Again taking our �optimistic� scenario, we see the potential for c.$1 million of operating profits to be delivered. That would put the shares on a multiple of around just 2.5 times earnings at yesterdays closing price � clearly signifying the upside potential should Geocurve continue to grow and new contract be brought on stream.
GLA
REGARDS
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