LUM 0.00% 2.3¢ lumacom limited

Fom a few moths agop.s Check out what it says about Asia :-)E.L....

  1. 1,645 Posts.
    Fom a few moths ago
    p.s Check out what it says about Asia :-)

    E.L. & C. Baillieu Stockbroking Ltd
    Lumacom Ltd
    Light me up!
    Rob Ward LUM $0.52 SPECULATIVE BUY
    (03) 9602 9222 Monthly Turnover (m) $2.9 Market Cap (m) $47.9
    [email protected] Shares Issued (m) 98.9 12 Month High/Low $0.55-$0.05
    September 2003
    Company Outline
    Lumacom Ltd (LUM) owns the global technology
    rights for a LED-based signage system called
    LumaSigns which has a number of applications, most
    notably large-scale video advertising. The developers
    of this technology are part of the management of
    LUM. The company’s overall objective is to
    commercialise this technology worldwide.
    Recent developments
    Recent activity in Europe and the US looks
    promising. LUM, in a 50:50 joint venture with Mega
    Profile, unveiled a large video screen in Barcelona in
    May- a deal which should bring it an $800,000 cut of
    advertising revenue for at least the next four years.
    Management believe that this success will lead to
    take-up of further screens in Europe- opportunities for
    which have been identified in conjunction with Mega
    Profile management. We expect announcements in
    relation to these screens to be made soon.
    LUM also appears close to obtaining advertising
    contracts for signs to be placed on the roof of No 4
    Times Square, New York- eventually having four
    signs (one for each side) on the building. The
    company is reliant on its US joint venture partner,
    Totius Media securing advertising agreements for this
    location before any details are announced. It is worth
    noting that at this stage, No 4 Times Square is the
    only skyline site approved for such advertisin g in
    New York. However, with support from Durst
    Organisation (property investor and owner of No 4
    Times Square), we believe that other opportunities for
    advertising using LUM signs will be forthcoming.
    Totius have proved a valuable partner to LUM so far-
    having already secured a major US order for the
    venture providing advertising revenue to LUM.
    A recent exercise of options was successful for LUM,
    raising $5.5m in cash- taking total cash held to around
    $6.5m. This should enable management to continue to
    pursue international opportunities whilst obtaining
    recurring revenue from announced advertising
    contracts.
    Outlook
    Management of LUM themselves note that
    commercialisation of the proprietary technology to
    date has been slower than expected. However, there
    appears to be ample amount of interest at present and
    we predict an exciting 12 months for the company.
    Successful demonstration of screens in Barcelona and
    New York could see an increase in demand for
    LUM’s technology. Joint venture partners Mega
    Profile (Europe) and Totius (US) appear to be highly
    active in seeking advertising contracts- providing
    positive indications for the future. Each additional
    major contract gained will prove highly lucrative for
    LUM and will provide important recurring income
    streams in the form of a cut of advertising revenue.
    We believe that the European market in particular will
    provide LUM’s best opportunities for winning new
    contracts in the coming 12-24 months.
    Recommendation
    On the basis of the quality of its technology and its
    close relationships with capable international partners,
    we believe that LUM is well placed to win a number
    of contracts in the near future. However, we note that
    with no earnings history and no existing market for
    LUM’s specific technology per se, that there are a
    number of risks involved in this investment.
    Accordingly, we rate the company a Speculative Buy.
    Share Price Performance
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    12/04/00 12/10/00 12/04/01 12/10/01 12/04/02 12/10/02 12/04/03
    E.L. & C. Baillieu Stockbroking Ltd Page 2
    Technology
    Each of LUM’s products utilises LED technology
    which provides a clearer picture with a longer life
    than alternative displays such as Neon, and cost
    benefits over conventional LED Displays.
    LUM’s technology is developed through the science
    of psychophysics. Specifically, this technology
    focuses on the process in which the human visual
    system perceives complete images whilst only
    receiving partial images. For example, an advertising
    display using LUM technology can use as little as
    only 10% of the pixels of a full display- yet appear to
    the eye to be ‘complete.’ This provides a considerable
    cost advantage to users of the technology and allows
    for advertising on a larger physical scale which would
    otherwise be uneconomical.
    LUM have three main products available - the
    LumaVideo, LumaPanel and the LumaPole.
    LumaVideo: (for viewing within 300m)
    Used indoors and outdoors, this technology utilises
    LED technology. Whilst this is a useful demonstration
    of LUM’s LED technology, we do not expect that this
    will be the major source of revenue for the company
    in coming years.
    LumaPanel: (for viewing over 100m)
    This technology is primarily designed for
    advertising/corporate branding on top of buildings.
    During the day-time, the advertising area has a fixed
    advertisement on it (like a normal billboard). It is at
    night-time that the technology can be used. The LED
    technology can be used for scrolling advertisements
    or for full video display on the billboard area. Along
    with the LumaPole, it is this technology which will be
    most ‘visible’ and which will have the most
    pronounced effect on the company’s public profile
    and awareness of its technology.
    LumaPole: (for viewing over 1km)
    This technology is primarily designed for advertising
    and corporate branding on the side of buildings and is
    used for very large displays. An installation has no
    effect on the outward view of the building.
    Strategy for commercialisation
    LUM management intend the technology to be used
    in outdoor advertising- specifically in high traffic
    areas where the requirements for minimum viewing
    distances can be met. Accordingly, there are limited
    opportunities for major contracts in Australia and
    LUM have sought to win contracts overseas. It has
    been seeking joint venture opportunities- intending to
    contribute its technology to these ventures. Current
    relationships are with Totius Media and Mega Profile.
    US: Totius Media (Joint Venture)
    In a joint venture with Totius Media, LUM have
    secured the right to place four signs on the top of No 4
    Times Square. These signs will be 55 ft x 55 ft and
    will be visible to approximately 10 million people
    daily from Manhattan and other parts of New York.
    Totius Media have announced that the signs will be
    launched in the October – December quarter of this
    year to coincide with the launch of the 360 ft
    broadcast antenna replacing that which was on top of
    the WTC. Being the only advertising property on top
    of a New York City skyscraper- we see this as an
    invaluable opportunity for LUM to gain widespread
    recognition of its technology.
    Totius Media have already placed an order with LUM
    for the US valued at $1.4m. We believe that this is a
    significant step for the company despite the fact that it
    has been overshadowed by the high profile No 4
    Times Square project.
    Europe: Mega Profile (Joint Venture)
    Mega Profile has been a highly active joint venture
    partner- being responsible for the first commercial
    demonstration of LUM’s technology in Barcelona
    which has been the catalyst for growth opportunities
    both in Europe and the US. We expect efforts by
    Mega Profile to win new orders for the venture to see
    success in Europe in the next 12 months.
    Asia
    We see the Asian markets as being an opportunity for
    LUM which they have not yet had the chance
    capitalise on. Should LUM secure a high-profile joint
    venture partner as active as Totius Media or Mega
    Profile in the region, we could foresee Asian revenue
    making a sizeable contribution to LUM’s success.
    History of technology and company
    LUM was registered in 1999 and listed in 2000 and
    was utilised to acquire the business and intellectual
    property rights of the LumaSign technology developed
    by Display Systems Advertising Pty Ltd (DSA). DSA
    was established by Monte Sala and his sons, Rodd
    (Managing Director and Board Member of LUM),
    Oscar (Executive Manager of LUM) and Mickey Sala
    (Executive Manager of LUM) for the development of
    data encryption technology.
    Monte Sala, the driving force behind the LumaSign
    technology, had a number of decades experience in
    the technology industries- having worked with NASA
    in the 1960s and at the University of Western
    Australia in the 1970s. The latter involved research on
    the psychophysics process would become the basis of
    the Lumasign technology.
    So while LUM is a relatively new company in its own
    right, the development of the technology and creation
    of relationships by the Sala family has been ongoing
    for a number of years.
    The Sala family have a successful history
    commercialising technology. Monte Sala was
    responsible for one of the world’s leading data
    encryption systems which is used by major banking
    and financial institutions worldwide. This system was
    commercialised by another public company, of which
    Monte Sala was the Chairman. Rodd, Oscar and
    Mickey were all involved in this process.
    As a result, this gives us confidence in the Sala’s
    ability to successfully commercialise the LumaSigns
    technology in Australia and internationally.
 
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