Ann: Beam Interim Profit Result Presentation, page-7

Bit stretched for time but awesome update and excellent investor presentation with new additional detail on the business that I'm looking forward to going through in detail. Will post my thoughts after that and maybe even an updated valuation to keep @StealthInvest happy - might not been soon though mate. Hopefully I can catch management presenting to PAC clients tomorrow too.

The market still very much asleep on this and my personal view from first glance is that the guidance for the rest of the year leaves a lot on the table. Present guidance implies 2H23 slowing down when it will get the full run rate from new products plus the compound growth of Zoleo subs.

Updated guidance is ~$4m vs ~$2.2m for 1H23 - there's no way this is decelerating. I'm still sticking with $4.5-$5m EBITDA for FY23 which I've stated previously here -> https://hotcopper.com.au/posts/66123757/single

There's no forecast cash level but again, I'm still sticking with $6-7m by the end of June. Some of the numbers support that...

Present cash $3m plus my take from this slide is normalised net working capital is +$4m vs a big investment in inventory and receivables that should unwind. Basically, there's a good case that you could add the difference, which essentially is $3m +$3m, which gets you to my predicted $6m to $7m. Obviously there's lots that can happen between now and then but outside of M&A it would be very difficult to make a case for a LOWER cash balance between now and June 30.




In the meantime, a flash update from Stephen. More detailed note to come with an updated/upgraded price target. There is STILL PLENTY OF TIME TO GET ABOARD THIS TRAIN. Amazing buying at these levels given the performance and outlook.

PAC Partners

BeamCommunications (Beam) | BCC

Events/news – reportssolid 1H23 results

1. Beams has released 4C and trading updates During January – so the results were somewhat pre-empted.
2. Sales up 69% to $20.5m.
3. EBITDA doubling to $2m for 1H23.
4. Guided to FY23 EBITDA of $4m helped by material revenue growth

Implication/impact

1. The release contains good detail breaking out Satellite Phone shop/ core beam products and Zoleo sales.
2. All divisions reported strong growth.
3. The core business is being helped by continued sales of the Iridium Go device family and now from the Iridium Executive product
4. Sales of Zoleo (10% of sales) into the Australian enterprise/government space is a pleasing development and strengthening marketing program line-up is supportive.
5. There is also a helpful table/chart showing the product continuum and how Beam’s products fit vs other products.
6. The business has also invested an incremental $2.8m in working capital in recent times and this will convert to cash in 2H23.
7. Capex demand and extremely disciplined cost control were also features of the result.

Investment view

We have a buyrecommendation. Beam Communications has solid position across a growth categoryof communications after years and years of sunk time and effort.

The microcap valuationmaterially (we believe) undervalues the position that Beam is now in.

Beam also has a clear anddetailed growth strategy across its portfolio of products including:-

1. Executive Go orders (backed by a minimum US $12m /5 year contract)
2. Iridium Go Orders (the smaller very established device) – that continues to sell
3. the Telstra MT DATA $1.2m+ (2 years) contract starts to really kick into 2H23
4. continued SatPhone Shop growth,
5. valued added service development
6. Launch of a second Iridium Certus device (we are not sure what this is).
7. Expansion of Zoleo into Europe – where the JV arrangement is better for Beam vs the North American JV.

Catalyst

1. New Iridium Executive Go re-orders
2. Leverage from a previously developed annuity stream, reduced capex and a well-controlled cost base.
3. Iridium Go re-orders
4. Zoleo subscription(s) updates/news
5. Value-add services

Model/forecast

Upgrades required. New note and new upgradedforecasts………. out soon.

Recommendation – Buy

Risk Assessment – High