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02/12/21
20:08
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Originally posted by UniTrader:
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No it is not. Look at and understand any other Chairman's address and see why. FWIW, This address talks nothing about the profitability of the company - absolutely core in the investing world - but speaks highly of non-financial agreements. It is meant to show interest in OEC building to some long term specification for an engine to meet the customers absolute need. That unique engine doesn't have to be. It also makes OEC somewhat unprofitable as the bells and whistles are just tinkering on an engine that is already claimed to be world's best. This is a contradiction! The share price in the FY 21 tanked after been above $1.60 and now is 50c. But the share price fell out of the sky simply because OEC had an one "build" strategy and comment from the Chairman is subdued to keep Boeing on side. If he is not 'spittin chips', I tell you what! His comment "The Company’s subsequent revenue downgrade, while disappointing, was handled swiftly and effectively by Management" is utterly misleading. And OEC screwed shs becaaaaaause their ANN in Feb 21 made it look like it was a negotiation - It was no negotiation it was Boeings' directive! Boeing just cut production as per their contract because the war in Afghanistan ended. I have said this before but the contract allowed for change across the 5 years and it was directly for Boeing to decide. Again, there was no negotiation when one party holds all! And guidance eventually equated 2021 with 2020. - a no growth scenario. So 50c is it newest benchmark as claimed by the current success of the $6.5m raised except the price this mornings went below 50c. Trust is reduced and shs have walked. Let me go back to talking about OEC's customer diversification strategy that says OEC must make a bespoke engine every time a new customer turns up at the front door. The conclusion is simple: Northrop Grumman and one of Singapore’s largest defence companies have been with us since 2020 and there is still no contract for production. OEC then go to Textron in 2021 to captured two new engine development programs - two further design develop programs that really do nothing than keep OEC's head just out of the water. If OEC's customer diversification strategy stays with defence industries we will be treading water forever. The only way out of this to get out of the current focus on the defence industry. So at the AGM last year we were told the defence was "it" and that you had to be trusted - meaning build-in years of military behaviours for associations to grow etc etc... Now we are told of the "customer diversification strategy": Hey presto we have Skyways. "An exciting new MoU with Skyways, an emerging leader in UAV cargo transport." Though contract seems to exist within the military. Hey Presto - just like Boeing-Institu! OEC must see that ASX listed companies must generate profits - none of this small company "value customers and their needs" will do. Not just military but all things to all people - I believe the changes over the last decade, globably, have accelerated businesswise to meet any demand of any consumer. Maybe Covid did this with the Uber meals or was it well before this when Iphone came to mean phone. OEC need to hit on the idea that the world's best drone engine can be fit for all types of purposes. Ideally one engine fits all to make best profit, but a small range of "off the shelf" engines meets most demand - the 80:20 rule. If small 'OEC' cannot get customers to see the difficulties of specifying an engine to fit a drone then it is lost as an ASX company. It needs to prepare the road so that all drone manufacturers (I bet a small one is already starting) see it best to buy an off the shelf 'world's best' engine and apply it to their specified (e.g. seismic, camera) drone. If not this "market idea" will go to a company out of say, China, who have the might. When the price tanks over the last year as it did , the call to expect a CR (capital raise) is everywhere [you will identify this across a huge number of hc posts, across a huge number of ASX companies]. And so it came. Unfortunately so did the fall in share price. Last year, and whenever I re-read OEC's presentations, I note the Shadow replacement to be won at tender and with opportunities by 4 US companies to win the contract. This was not just the US drone but a navy and army contract in Australia was also highlighted (LAND129 and SEA129). I wonder where this stands, as ANN's have dried up. Oh in the CEO's address we are position for profitability in 2022. New contracts in place recently: Nil. Revenue guidance: Stable Boeing demand: Conservative Customer benefits (bells and whistles): Value proposition CR: $6.5m needed for further devel programs Future Opp: That is where the Shadow, LAND129 and SEA129 is brushed aside as mid-term away Support Sovereign Cap: is this all things Australian Lastly - Call to "Return to profitability": Where is that?
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The following announcement gives Boeings-Insitu further fuel avenues for its drones. It shows how Lithium battery technology's introduction can fit 'off-the shelf' sales that OEC might have obtained in further markets if it had been first mover. It limits the possiblility of OEC widening sales through what I have recently suggested on this post.https://hotcopper.com.au/threads/ann-li-s-energy-collaborates-with-boeings-insitu-pacific.6463253/