@madamswer I'm presuming from your post that you are now out of...

@madamswer

I'm presuming from your post that you are now out of SP3 altogether and I must say I found your contributions to the thread over a few months to have been quite illuminating and very informative.

I liked your valuation methodology but wondered how I could come up with quite significantly higher valuation numbers under the various scenarios you outlined. It wasn't until I re-read your very first post on SP3 - that it seemed apparent to me how I could account for the differences.

The following quote from your first SP3 post provided the counterpoint for me:

"Any investment case discussion about SP3 should be prefaced with acknowledgment that it is not a business of great quality: the market place for SP3's service offering is competitive, product obsolescence rates are high and there is sales execution risk."

Taking each of the four points in turn:
1) "it is not a business of great quality". Well, I have simply formed a quite different view from my own assessment of the technology and the potential markets that are available. Also, when I look at the high margins involved in the business - to me it seems to be a business of potentially significant quality, but I accept that judgements on this point can be quite subjective.
2) "the marketplace for SP3's service offering is competitive". I would suggest that is true only up to a point. Obviously, competition for basic CCTV functionality and data storage is only applicable with other companies that also provide solar powered cameras with battery back-up, because grid connected camera surveillance and data storage is a different market. What I see when I compare SP3 with other companies selling solar powered cameras with battery back-up is a company with cutting edge camera, data transmission and data storage technology and relatively unique artificial intelligence attributes which enhance the value proposition when compared to the residue of competitors. Finally, if the market for SP3's service offering was exceptionally competitive, it seems counter-intuitive to me that SP3 would be able to generate the high margins that it does.
3) "product obsolescence rates are high". I'm unclear about where the evidence is that would support the applicability of this assertion relative to competitors. Perhaps you have looked at the 3 year depreciation schedule and determined that a 3 year economic life for camera products is too short - although my enquiries lead me to believe that many SP3 cameras remain in very serviceable working order for a reasonable time beyond 3 years. However, I also think of product obsolescence as being about the ongoing relevance of a product to a particular market, and I note in that regard that while the HD5 has been superseded by the STA6 as SP3's flagship product, the former has been at the forefront of SP3's service offering for more than 4 years and retains ongoing and very high applicability for quite a few market segments. So, I'll be interested if you can tease out that assertion a bit more.
4) "there is sales execution risk" I do accept all the arguments you have made on this point. However, my own conclusion is that the risk is becoming mitigated as runs are starting to be put on the board by the company with respect to sales, and that this looks likely to continue. At the end of the day, it probably comes down to a subjective judgement as to whether you believe the sales strategy that was developed and rolled out by the current CEO is fully viable and robust, and I guess I do believe that from what I've read and seen.

Anyway, it was good to have your contribution on this thread while it lasted and all the best with your other share trading/investment pursuits.

zeno9