Upswing may be due to a new broker coverage by PAC...

Upswing may be due to a new broker coverage by PAC Partners
Values at 0.32, plus the jv has a value to BCC of > current share price (20c when it was written)
Below sent out by Beam to shareholders, so I take as public info. I have deleted link to the report in case that isnt viewed as public info, and prob HC would moderate external links anyway.

View this email in your browser --> Leading broker initiates coverage on Beam with a "Buy" recommendation Dear Shareholders, Beam notes that one of Australia’s leading small caps broker, PAC Partners, has issued an investment report on Beam with a “buy” recommendation to its clients. It said it used a “conservative valuation” to get a price target of $0.32 a share and said there is a further $0.23/share in upside value. What’s also noteworthy is the report’s valuation on the ZOLEO JV, which PAC’s analysts estimate to be worth $0.44/share alone (not included in the price target) – implying that Beam’s stake in the JV is worth more than its current market cap. This underscores our long-held belief that there is significant inherent value in the JV. This report is independent and is not commissioned or paid for by Beam. As a courtesy, PAC Partners have agreed to allow Beam’s investors to gain access to this report via the link below. Highlights from the report are also listed below: COMPANYBeam Communications (BCC) MCAP A$17m $0.20/share Date: 3 July 2022 RECOMMENDATION Buy and PT $0.32/share, High Risk EVENT Initiation of Coverage – Beam’s got you covered KEY POINTS Initiation of coverage with Buy recommendation. Beam (BCC) is strongly positioned in the fast-growing personal communications market via its relationships with bandwidth providers. BCC has an innovative product range that is rapidly gaining traction. Iridium (IRDM.US) estimate that the personal communication device market is set to almost triple to 1.3m units from 2021 to 2025. BCC is well placed to capitalise on this growth. BCC has been assiduously creating a subscription business which we believe now has material value via the Zoleo personal communications devices with circa 80k (cumulative) devices shipped. As Zoleo devices are turned on and activated – the subscription revenue starts to materially flow. We estimate that each device could create gross subscription revenue of $150 p.a split according to the JV arrangements along geographies. There is also value in the 100% BCC owned SatPhone Shop, a major distributor of satellite and telco communication devices within Australia. Finally, the traditional ruggedised VAR BCC equipment – while lumpy – remains a valuable part of the overall BCC business. The second-generation of Iridium Certus® product in particular set to grow rapidly. INVESTMENT VIEW BCC has P/E multiple of 12.7x FY23F and is well capitalised ($5.4m cash 1 June 2022). We believe that there is up to an additional 23 cps probability-weighted upside to our valuation in the ignition of growth of the Zoleo subscriber base in Australia. Underpinning this analysis is a growing bank of subscription revenue. The outdoor adventure market has been impeded by COVID but as adventurers get out and about – demand will improve. Growing awareness of the utility/value of adventure communication products and greater functionality are all helping to grow demand. We use a conservative blended valuation to derive a 32cps valuation. We’d note that the Zoleo JV likely has emerging intrinsic value well above the JV’s share of NPAT that is feed into our BCC model. We have only factored in the US contribution into our financial model. KEY DRIVERS Further Zoleo product sales announcements and the associated subscription growth propelling the business to a consistent and material financial profitability and this getting recognised by the market. Changes in Australian and international safety standards driving demand. Further material sales of next generation Iridium Certus® products. Increased bandwidth opening up further use cases including potential subscription revenue. Material sales to enterprise and government. Successful expansion and sales into new geographies. Accretive bolt on acquisitions of relevant content – likely medium term.