No upgrade to my volume forecasts for the JV as I had 29,000 units for 1H23 which included ~13k carry over from the 15/12/21 order leaving a balance of 16k. This note says most will be delivered and invoiced in 1H23 with the balance in the second half. So I’m including the 16k in the first half and carrying over the 4.8k into 2H23.
The key presumption from here is that any new orders for the JV will be late 2023 and 2024, so our certainty on volume increases but it also means the ability to rapidly grow volumes in the very short term will be difficult as demand clearly exceeds supply - a pretty good position to be in.
The questions/thoughts that come to mind on this include: 1. Does BCC have a bit more pricing power to extract a bit better than low margins on the equipment? Even a small gain here could be worthwhile 2. This is going to significantly increase the working capital position for BCC. I’ll add a DCF to the valuation thread when the half year is out but I’m mindful that this will eat into free cashflow while earnings inflect 3. The volume and certainty of orders confirms two key things (a) high consumer demand for the device and price point, and (b) lower risk for BCC as this is effectively underwritten by the JV.
Once the airtime revenue meaningfully comes through it will be game on
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