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69.5¢ structural monitoring systems plc

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goodgriefmike

26 Posts.

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17/08/17

12:19

Post #: 26560677
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Originally posted by lockstock79 ↑

Well I for one am happy with the announcement. In fact it appears to be pretty much exactly what the company forecast IMO.

What I am amazed about is how cheaply people are willing to sell their shares. Now I totally understand that some people are just happy to get their money back, or take the profit they are sitting on, however selling at this stage seems incredibly near-sighted to me.

The airline industry is cut-throat at the best of times, and any advantage an airline can gain over others is usually grabbed with both hands. I would imagine early movers with this technology will be advertising this new safety feature to customers in order to gain competitive advantage, even if it doesn't strictly speaking make their planes any safer. The fact that this technology saves airlines money should be enough to see most Tier 1 airlines in the USA sit up and take notice, as Delta will now be enjoying a competitive advantage that none of their peers have. I will be surprised if we dont see another deal penned in a comparatively short time frame to this one. I also suspect it won't be long before we see uptake outside of the USA as well, with 37(?) Tier one airlines (>25M passengers p/a I think) worldwide.

A number of people on this forum have commented that the numbers are low, however I disagree. The purchase of the sensors will see our bank balance topped up in the short term while the yearly fees are what this company will thrive on. If we were to pick up half of all Tier 1 airlines (say 18) over the next few years (a reasonable forecast I believe as other airlines will not want to be left behind IMO) that would see us pulling in $180 to $270M per annum. Working on the average of $225M and a guess of 90% margin (I suspect sale of product will cover most of our expenses) gives us roughly $200M. This gives us roughly $2 per share of profit, and $30 per share at a conservative P/E of 15. As to dividends, discounting their ambition of being the highest dividend company on the ASX, let's say they pay out 60% of profits as dividends, or $1.2 per share. Not a bad return on current share price if all goes to plan.

This does not take into account any of the following:
1. There are 51, 81, 844 Tier 2, 3, 4 airlines respectively. I would imagine many small airlines struggle to compete against the big players, and would be just as likely to benefit from the reduced servicing and maintenance costs our technology allows. In fact I would guesstimate that downtime is even more costly to smaller players with smaller fleets with less redundancy.
2. This does not include rotary aircraft.
3. This does not take into account military aircraft, both rotary and fixed wing.
4. This does not include any future applications for CVM technology such as bridges etc.

Apologies if I made any calculation errors as this is all back of envelope stuff. DYOR.

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I don't post much. This is Powerful, thanks. I can't but see this technology on this generation of 'wings' and masts too. Take a trip in Europe and you can't close your eyes for thousands of these things belting out the rpm's. Inhospitable and remote locations, high tec airfoils thats are a compromise between lightness and strength, these wind farms are (imo) surely a dead cert for remote and safe monitoring of the structural integrity.

Last edited by goodgriefmike: 17/08/17

SMN Price at posting: $1.81 Sentiment: Buy Disclosure: Held
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