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The market knows far less about SEE and its prospects than the Directors.
The Directors have been buying as the punters have been selling. Clearly they expect good results with exciting commercial developments. Otherwise, they would have bought after the Results
glandore
Covid risk - especially covid in Australia / NZ. i.e. impact on expansion of Fleet [the old achilles heel]. From my pov, overdone.
imo, the Tornado, Griffiths, Directors' share purchases are significant. They have the most complete info. But nobody in the world has reliable data on covid's impact over the next 12 months.
Auto chip supplies accelerate
JPMorgan analysts estimate production cuts by global carmakers related to the chip shortage would fall to 399,000 vehicles in the third quarter compared with 1.9m during the second quarter.
https://www.ft.com/content/49a3d519-5d28-4ef3-93cc-34352bb3e4a7
https://www.ft.com/content/d0f4efec-d83c-47e1-b81f-7b57b729d76d
"Carmakers can expect a sharp upturn in chip supplies in the coming weeks, Taiwan Semiconductor Manufacturing Company (TSMC) said, signalling that a global shortage may have moved past its most crippling stage."
To ascribe no value to Aviation is now extraordinary. Imagine a start-up just focusing on eyetracking in the Aviation / console sector with no Fovio / Guardian. Would it have zero value? If so, why would major businesses seek to contract with a valueless business?
Time shortly for a new NPV model from Cenkos?
Get up to speed if you want to make such strong opinions.
You are factually wrong. McGlone does think like a shareholder - because he is paid a large amount of his salary in share options.
Given how many shares he is about to receive under the scheme [7.5m], quite impressive that he also buys shares.
"flight school enrolments are ramping up again, especially in markets where recoveries are taking hold, the L3Harris and CAE aviation training groups told me last week".
https://www.ft.com/content/e6ed366f-8c99-4c3b-b75e-7bec9d9c0ee1
I loved the all-new augmented reality heads-up display that gave video, navigation, and other road info by projecting images directly into my field of vision on the windshield. I know it sounds distracting, but it was so dialed in that I felt like the aids were inside my own eyeballs, not generated in a separate machine.
https://www.bloomberg.com/news/articles/2021-06-21/2021-mercedes-benz-s-class-sedan-review-the-best-in-its-segment?srnd=premium-europe
Terrym
Forgive my return to the Net Present Value model again - but what does it tell us?
Cenkos use conservative projected cash flows in their model & then apply a high disc rate to get to 16p. The market at 9.5p uses a higher de facto discount rate. That disc rate = cost of money x risk [crudely]. Clearly the market applies a huge disc rate to SEE because the market, as yet, lacks conviction in those cash flows - or discounts the whole story through lack of engagement with the story.
Therefore, the question now for the share price is at what point does the Market either believe the Story or more pertinently bother to find out about it?
Let us assume that such time might be about from this autumn onwards. By then there shd be more flesh on the bones, more visibility on cash flows, modelling of larger cash flows, more imminent positive cash flow [thus jacking up the front loaded NPV model] - & you suddenly get both the higher cash flows plus tumbling disc rate & a rocketing NPV as the story breaks out from the ghetto. We are still in the ghetto.
The problem with p/e ratios is twofold: cash flow is a sounder metric than earnings [even earnings averaged over period of years] & the disc rate in the NPV model addresses both the cost of capital & perceived risk [i.e. risk and perception i.e. market sentiment]. In effect the model gives you the risk adjusted Return on Capital Employed [ROCE], Buffet & Terry Smith's key metric.
Does the NPV model fail with Uber etc? i.e. valuation based on narratives of world market domination & sketchy positive & distant cash flows with up front cash neg flows? You might say the NPV model asks some good questions. The narrative is the shtick with Uber etc. The conviction is untold riches. At some point they have to deliver on positive cash or else it's all hot air
In the end ROCE is all about wanting a good return on your money. NPV gives a comparative basis. But the numbers are all BS - since no one can know the future. But the NPV is a travelling ruler that gives us a yardstick to see how things are going.
In the end it is the story. Conviction. And the story never comes true if the management are clowns. So at this stage, convincing execution of the plan is everything [given SEE are not resource constrained]. Looking at SEE's track record, I get a good picture of their evolving ability to deliver the plan.
Great interview. My take, fwiw:
Fovio - coming to the boil. Autumn shd be very exciting
Aviation - fantastic update. Really is going commercial. Assuming CAE retro fit eventually over 50% & install on most new sims, then you can do the maths. Given the hi margin & prospects for further mkt segments, this looks like a $1bn business in the making.
Fleet. Strong Q4. A lot better than a profit warning / excuse. Coincides with the new Guy. Momentum might finally build. Given 300m commercial vehicles it is such a big market. Let's get serious!
No impact on the SP but who watches the vid? But far more important for LTHs is to hear that the underlying business is happening.
So here is my scorecard out of 10 on progress this half year
Aviation. 10. Given CAE's quality endorsement I give this full marks
Fovio: 10. The lull in news is irrelevant. The commercial relationships & tech that SEE have at this critical time look optimal. Next FY starting next month looks [finally] really hot
Fleet: 5. Avoided any of the big screw ups that characterised the last 5 years [I hope!] but no real momentum. Can they get this thing running fast? Given the catastrophic loss of life from sleeping lorry drivers [i.e. huge lumps versus cars] sales here shd be flying. The Insurance argument alone underpins Fleet's commercial logic. This business shd be growing at at least 100% pa by now. Why isn't it? Resources? Marketing? Management. On the plus side, SEE must have learnt a lot in those 5 years and sorted out a lot of the process in this time. The IP value of Fleet underpins Fovio but now they have to put the foot on the gas and justify the Capex with some explosive revenue growth
The impact of the RNS has thus far been minimal. Understandable since the deal was for a modest amount and the tech is obscure. How many of the City's analysts specialise in eye tracking sector? Zero? [if you exclude Barnden]. It is hardly a hot theme like bitcoin.
However, the contract follows on from the L3 one [though it took its time] and, as such, demonstrates that the L3 deal was more than a flash in the pan. Lightening has now struck twice for Aviation. The bet now looks like this tech will be fully adopted. So tiny revenue now but in say 5 years this should be a big and fast growing business in a sector where they have as yet no competitors and have strong pricing power. The following 10 year period might be one of great development thru the Aviation sector. Such a business outcome would be both high quality, high ROCE and tick all the boxes. If this is right, visibility on this will only grow from here. Light dawns slowly and then reveals the picture.
The correct evaluation depends on far more than the initial contract value which I guess relates to the initial 3 sims. For CAE to commit involves their time & they wd only do this if it had potential for roll out across both their military & civil sim mkt - which is big.
The potential follow thru long term in Aviation & in flight is exciting
Agree that the significance is working with all US manufacturers.
The possible legislation is neither here nor there - though another straw in the wind. Given the regulatory timetable in the EU, US car manufacturers will adopt the tech in any event or risk having dinosaur products that will become unsellable in the EU & I assume Japan
https://www.ft.com/content/9f77bf14-6cad-48d2-b068-e625ed44f1fd
This is a tasty little article on accounting, intangibles & R&D i.e. very relevant to those that critique SEE [& similar]