Stratech Group

[Curiousparty]

I would say 30% of the 35 airports would go to iFerret. So, we have 10 new + current 6 airports to give total of 16 airports. Simple math calculation, market cap should be ~ $200mil.

Even if I assume 20% of the 35 airports go to iFerret, we have total of 12 airports. Market cap should be around ~$160mil

Not forgetting that there will also be other recurring incomes from:-
a. iFerret capability enhancement
b. iVAC products

Huat!

In fact, Stratech has identified 35 airports with 93 runways that have taken action to implement an FOD surveillance system. And, the company is doing everything it can to persuade them to complete the transactions, including helping with the financing. ' In December last year, we announced the creation of Stratech Finance, which would provide flexible financing for iFerret,' Chew says.

Hi curiousparty, do u have the source for this quote? I thought this might be substantial information. Based on the 35 airports, I reckon at least 20% may go to iFerret.

Side note: I glanced through 3 yrs annual report yesterday. Management seems to be quite transparent about their dealings. Their ar 2013/14 is a dead giveaway on which country's military airforce procure their system (look at their segmental revenue by region). It be a windfall if they can move deeper into this segment.


To general: is there any unlocking value for a stock that has not paid any dividends thus far? I do notice that david chew and associate control <50% of the company, so a takeover/delisting might be one of the value unlocking moves.

Sent from my D5503 using Tapatalk

[Curiousparty]

incidentally, Stratech is top volume today.

The key barriers of entry:-
1. FAA
2. iFerret winning the Dubai contract, ousting the other 2 technologies
3. military arena
5. head start - already in negotiation with X numbers of airports which are in midst of firming up their budget.

________________________________________________________________________________________________________________________
[I am not here to promote any stocks. Please always do your own research before embarking on any investment decision. I will not be liable for any of your own decisions.]

[Bubbachuck]

Wow 90M vol today. A lot of people now are Curious Party on how this iFerret will turnaround this company. [emoji1]

Ok. I'm curious too and vested in tiny speculative position. Will make decision after the results.

[DP28]

Steady state assumption when fixed costs have been covered.
taking reference from comparable software companies.

Let's do a more conservative approach.

30% of automated FOD market = 60 airports.
1 airport per annum = $10mil revenue
30% of this revenue goes to marketing agency
Hence 1 airport will earn $6.6mil revenue per year.

60 airports will earn $396 mil revenue per year. Let's take a 50% discount. 60 airports will net $200mil revenue per year.

NPM - let's assume to be just 20%.
We have net recurring profit = ~$40mil per year.

Assuming a P/E ratio of just 10, market cap should be around ~$400mil.

10 multi-baggers?

The market size for automated FOD (say) 2% of the total airports around the world.

There are ~ 10,000 big airports around the world (7000 commercial + 3000 military).

2% of 10,000 = 200 airports. Of these 200 airports, assume that iFerret corners the market by 30%, this will give 60 major airports.

Each airport contract size ~ $50mil over 5 years => $10mil of revenue per annum.

Assuming net profit margin of 50%, $5mil net profit per airport per year.

At steady state, 60 airports x $5mil net profit per year = $300mil net profit gain (recurring per annum)!!!!!!

Current market cap of Stratech is only ~ $36 mil
******

Does the above make sense?

Why do you assume 50% net margin ? Their 1H 15 result net margin was 1.3%.

(Not Vested)

Curiousparty, I applaud your kindness in sharing this interesting piece However, I do wanna caution you on the assumption and that this company is in steady state and their potential earning "capabilities"

IMO, this counter is far from a value pick.
1) Earnings visibility remain weak dragged by being still in watchlist and time running against time.
2) Despite placement exercise at 0.018, cashflow are constantly depleted via high cost and director's fee.
3) Storyline has been nothing new as before. FAA patent on IFerret has been established ages yet unable to monetized it.

However, I do concur there's something to this little dime that can turn diamond. Given Singapore govt strategic expansion heavily into aviation over last 2 years, we may see strategic M&A if big boys may just throw money to buy these patent for tikam (in their view) while fat chew gets a seat on the board.

Just my 2 cents.

[Happymeowmeow]

http://www.straitstimes.com/news/busines...p-20150504

[LionFlyer]

incidentally, Stratech is top volume today.

The key barriers of entry:-
1. FAA
2. iFerret winning the Dubai contract, ousting the other 2 technologies
3. military arena
5. head start - already in negotiation with X numbers of airports which are in midst of firming up their budget.

Your barriers to entry are deeply flawed:

1. FAA is not a barrier as they do not endorse any particular technologies or regulate companies. They do however, set rules with regards to FOD detection. In any case, I note another company has also obtain FAA 'endorsement'

2. It's one deal, and doesn't mean Stratech win in Dubai, it will form some kind of barrier to prevent other companies from wining elsewhere. I believe Qatar is using the UK solution, while Thailand's Suvarnabhumi is using X-Sight. So it's anyone's market for the time being.

3. There is nothing to assess that would imply some form of barrier.

5. Again, the same can be said for other companies in the field. (2)

I'm not trying to pull you down here but you are only emphasizing the positive side of things. As an investor, the most important question you need to ask is "WHAT COULD GO WRONG".

[edvantage]

6 runways airport

Amsterdam Schiphol Airport

or

Denver International Airport?

[Curiousparty]

China likes to copy what is in Spore. If iFerret is accepted by China, it is indeed a homerun!!!!!!

________________________________________________________________________________________________________________________
[I am not here to promote any stocks. Please always do your own research before embarking on any investment decision. I will not be liable for any of your own decisions.]


*******************

The Business Times Singapore, April 7, 2015 Tuesday

Stratech completes revamp, eyes overseas growth;
Streamlined group has greater flexibility for acquisitions and strategic partnerships

THE Stratech Group, the new listing entity that has emerged following the recently completed restructuring of Stratech Systems, is eyeing overseas markets to drive growth.

Under the restructuring by way of a scheme of arrangement first announced in October last year, Stratech Systems is now an indirect wholly owned subsidiary of The Stratech Group. One aim of the revamp was to streamline the group for global expansion. Where mergers and acquisitions are concerned, it allows greater flexibility for acquisitions and for strategic equity partners to tie up with the group's subsidiaries, executive chairman David Chew said.

Stratech Systems, which was placed on the Singapore Exchange watch-list in June 2013, provides solutions used in industries such as homeland security, aerospace, defence, maritime and surveillance. Some 85 per cent of its revenue stems from the aerospace business segment.

The group's flagship iFerret airfield/runway surveillance and foreign object & debris (FOD) detection system, for instance, helps to identify the presence of foreign objects on airport runways in real-time, although it can also be deployed for other areas such as rapid exit taxiways, taxiway crossings, parallel taxiways and aprons. Aside from compromising safety, foreign object damage can result in flight delays and costly aircraft repairs if the plane is impacted in any way.

iFerret is currently used at Changi Airport and Dubai International Airport. The group also recently clinched a FOD detection system contract for Hong Kong International Airport. Commercial airports aside, there is also a market for military airbases.

"In the last 12 to 18 months, there's been a lot of focus on aviation safety," Mr Chew said. The group is also establishing corporate entities in the Middle East, China and Europe to help tap business opportunities.
Mr Chew added: "If we find a partner in China that would help us be a dominant player in the aerospace arena, that would be a home run for us."

Another potential growth market that it has singled out is the US, where iFerret was certified by the Federal Aviation Administration (FAA) in 2012, making it one of four systems worldwide to be approved by the US aviation authority. In addition, iFerret has been granted a "Buy American" waiver by the FAA, which otherwise requires major projects that receive grants under the Airport Improvement Programme (AIP) to use systems that are US made.

"We're confident there will be quite a bit of traction this year," Mr Chew said, adding that the group has done a lot of "groundwork" in the US for business development. He thus reckons that purchases from potential customers in the US will start to come in this year.

"The market is indeed ready to take off. What the FAA has done is set the standard for airports globally to follow," he said. Stratech, along with other market players such as UK-based QinetiQ Tarsier and Israel's X-Sight FODetect, are among those carrying out a pilot site in the US. Funding for the first of three runways under the AIP programme is expected to be announced soon, he added.
Aside from securing contracts for its systems from global customers, Stratech is eyeing maintenance contracts, which could help provide a steady stream of recurring revenue.

In a financial update in February, Stratech Systems said that for 3QFY15 - the three months ended Dec 31, 2014 - net loss widened to S$1.82 million from S$0.76 million in 2QFY15 and revenue fell to S$1.32 million from S$5.66 million. The drop in revenue was in line with the delivery milestones of existing contracts.

[edvantage]

incidentally, Stratech is top volume today.

The key barriers of entry:-
1. FAA
2. iFerret winning the Dubai contract, ousting the other 2 technologies
3. military arena
5. head start - already in negotiation with X numbers of airports which are in midst of firming up their budget.

Your barriers to entry are deeply flawed:

1. FAA is not a barrier as they do not endorse any particular technologies or regulate companies. They do however, set rules with regards to FOD detection. In any case, I note another company has also obtain FAA 'endorsement'

>>> Without FAA approval,no IATA accredited airport will even look at your product

2. It's one deal, and doesn't mean Stratech win in Dubai, it will form some kind of barrier to prevent other companies from wining elsewhere. I believe Qatar is using the UK solution, while Thailand's Suvarnabhumi is using X-Sight. So it's anyone's market for the time being.

>>> Doha, like Dubai may have a change of heart. If you know the problem of mounting the sensors at the runway edges, you would understand why Suvarnabhumi may also have a change of heart too

3. There is nothing to assess that would imply some form of barrier.

5. Again, the same can be said for other companies in the field. (2)

I'm not trying to pull you down here but you are only emphasizing the positive side of things. As an investor, the most important question you need to ask is "WHAT COULD GO WRONG".

[BeDisciplined]

Sigh. Spent so much time reading over the weekend, and yet didn't make a penny...sad. The future is for us to see, but the immediate hype and story have driven prices up and allow one to make a quick buck...SAD.