Long term holder in NEA and based on the full year happy to hold. Key points to take-away for me are were the forecasts provided in the Investor Presentation.
1. They forecast that US ACV will at least double in FY18. This will take it from USD 5.3m to USD 10.6m (AUD 13.5). Per page 14 of Investor Briefing, this would be US significantly ahead of AU base-lined to time of capture.
2. Forecast AU ACV expected to have double digit growth. In FY17 it grew by AUD 5.6 (16%). Assuming same value increase in FY18 (which would be 14% growth) - closing ACV would be AUD 45.6.
3. Taken together, guidance therefore indicates closing ACV for FY18 to be around AUD 60m - an increase of AUD 13 million.
Extrapolating out the impact on revenue, revenue for FY17 (40.7m) was close to the average of the opening & closing ACV of 41.7m. On this basis I would expect revenue for FY18 of around AUD 54m - an AUD 14m increase.
Loss after tax for FY17 was 5.3m. Revenue increase of 14m would allow expenses / tax to increase by 9m and NEA would still break-even at group level. My expectation for FY18 is a very small (<500k) NPAT.
Big unknown is around expenses - while I wouldn't expect significant change in capture costs (as Hypercam2 can fly at higher altitudes) sales & marketing / research & development is a different story.
Potential for upside in the above exists with new product offering (also wouldn't be surprised to see another strategic partnership announced - particularly around 3D content), risk is around the costs incurred increasing revenue / ACV.
Taken as a whole happy to hold - any movement in SP over past week and coming months for me will largely be technical movements, given fundamentals haven't changed significantly. Can't see it going below 50 cents in absence of any news, likewise can't see it breaking 75 cents.
NEA Price at posting:
64.0¢ Sentiment: Hold Disclosure: Held
