Another Energy Optimiser@15% of BUD mcap

VIVID TECHNOLOGY LTD (VIV) (Part 2)
SUMMARY ANALYSIS
MCAP: $25.7M @ 5.4c

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Revenue Generating

What is important is that VIV’s Matrixx has started to gain significant traction from being a “Proof-of concept’ stage in FY17 to now being deployed and solidifying formal relationships at major enterprises in Australia as well as international.

Its recent half year results posted a 76% half year revenue increase to $3.81m or an annualised revenue of about $7.6m. Reflecting this result, Installed Area under Light at customer sites are up 30% to 732k sq metres saving 3.6GWh of electricity consumption equivalent to 3,682 tons of CO2 emissions and $738k in lighting energy costs.

Apart from establishing Australia’s first ever off grid enabled warehouse lighting in the Northern Territory for Linfox group as well as several other of its locations including Linfox’s Marsden Park distribution centre, VIV has also won business in Hong Kong with the large Kerry Logistics Group as well as several facilities in Vietnam, Mexico and Malaysia. Their blue chip customers range across several verticals namely Logistics/FMCG/Distribution/Ports/Retail/Healthcare/Hospitality /Services/ Education/Property and include names such as Asciano, Honeywell, Coca Cola Amatil, Dulux, Woolworths, Asahi, Diageo, Mercedes Benz, Port of Melbourne, Accor Hotels, NSW Health, Mirvac and RMIT amongs others.

In 2017/18, they have secured customer orders of $6.1m with about $3m that is yet to be booked until completion of works. Near term opportunities pipeline is looking healthy in excess of $20m from existing customers.

What is also appealing is its continued move to sign customers on an outcome based annuity based Platform as a Service (PaaS) model which provides constant annuity based income. During the quarter, the company successfully transitioned key customer sites to longer term multi-year service agreements. This will continue to be an ongoing and growing focus across the business, providing the Company with
long-term annuity style revenue streams in addition to the CapEx and Lighting-as-a-Service (LaaS – Asset Management) models.

• Award Winning

MATRIXX® was awarded Best Innovation in Energy Efficiency 2017
VIV was also awarded

• Frost & Sullivan’s Australia 2016 Growth Excellence in Smart Lighting Solutions award ;
• Westpac’s Inaugural 200 Businesses of Tomorrow for businesses to shape Australia’s future.

• Valuation

Peer Comparison

	Column 1	Column 2	Column 3	Column 4	Column 5	Column 6	Column 7
1			Annualised Revenue(m)	Shares(m)	Price	Mcap	Mcap/Rev
2	BUD[/B]	Buddy Platform	$ 1.71	1,072.07	$ 0.165	$ 176.89	103.32
3	VIV	Vivid Technologies	$ 7.62	476.72	$ 0.055	$ 26.22	3.44
4	BIQ	Building IQ	$ 7.16	235.59	$ 0.085	$ 20.02	2.80

All 3 companies offer solutions to reduce energy costs

VIV is currently trading at a modest MCap/Revenue of just 3.44x which is modest, and IMO reflects an undervaluation just as the case with BIQ.

Benchmarking its valuation with another microcap Skyfii (SKF) which now has a market cap of $60m (@22c) (annualised revenue of also circa $7m), IMO a more reasonable valuation should be circa $38m in the very near term which equates to 8c (at mcap/rev of 5x) and potentially 10c and above if continued revenue growth can be demonstrated in the next quarterly.

It should however be noted that VIV is still operating at a half yearly loss of $2m, although its recent 4C has shown that a positive net operating cashflow of $2.4 million, a distinct difference to its peers on the above table (BUD -$2.8m/ BIQ -$1.87). This alongside a healthy cash on hand of $3.9m (following mid 2017 CR) augurs well for VIV financial position going forwards.

The above analysis reflects the author’s own personal opinions and you should always do your own research (DYOR) when considering opportunities.