Razzle has been very good with his "how long is a piece of string" question, with reference to how long will it take to deliver FAA approval. And with good reason, because it's taken (and continuing to take!) a bloody long time!
But let's use that "piece of string" analogy in another way, positively, and as Init states, get "rude" by daring to consider "revenue " and "profit" going forward.
There are many posters that have a far better grasp of the aeronautical industry compared to me. And I'd like to think that collectively we could come up with a (very conservative) view of the potential earnings of SMN going forward, assuming that FAA does indeed approve the APB application around end of April 2023. And from what we got from SMN yesterday that now seems quite likely.
So where do we start? We don't have many facts, so it's going to be very rough until more information comes out as to which CVM sensor applications are to be introduced. And lets be very very conservative!
We can assume that for a start Boeing will enable installation of APB onto its new 737's going forward. Who pays, don't know, maybe it's the customer, maybe it's Boeing plus a commission, who cares - but SMN gets the revenue. How much per plane, once again don't know, but it is a critical question. Let's be conservative and say $20k per aircraft. Is it acceptable it will be fitted to all future production of 737's. Again don't know (someone?), but assume at this stage yes. That's roughly 30 units per month (building up to 47 in the next year), thus let's assume on average 35 units per month from start of 2023/24 financial year:
35 x $20k x 12 months = $8.4 million. Oh, that's US$, = A$12 million.
Then there's Airbus, A320, assume some sensor applications similar to APB, at around 50 units built per month now building to 65 monthly over the next year, say an average 60 per month:
60 x $20k x 12 = US$14.4 = A$20.5 million.
Yes I'm probably wrong, so lets drop my estimate back, by 50%:
Boeing A$6 million. Airbus $10.25 million.
Total $16.25 million.
Embraer ? Forget it for now, but we have also had SMN refer to past communications with that company.
So lets assume first full year of sensor installation, in new planes alone:
Total revenue $16.25 million less corporate costs (assume AEM break even on other radio manufacturing) of say $2.25 million = $14.0 million.
Forget past tax deductions, assume 30% tax rate = A$4.2 million. Thus ~A$9.8 million NPAT.
Oh, then there's the backlog of CURRENTLY FLYING aircraft, how many ? Don't know, but it's important. We know that Delta gets a discount, all other airlines pay full amount. How many? We know another airline has been invited to the upcoming installation in March. It's probably United, also a huge fleet of applicable aircraft - why United? Because Rick ?(my apologies, old age setting in) was formerly the Maintenance Engineer with United. They have a fleet of about 130 737's - not too shabby!
And then the recent reference to 17 other airlines now making inquiries (probably includes United so say 16).
Thus the retro-fitting will be with SMN for a considerable time - suggests that the initial P/E should be increased to at least 15:1 initially (remaining conservative JB not 30:1 as you might suggest, it's recession times), reducing thereafter.
Thus at a PE of15 x $9.8 million = $147 million. If 130 million shares = $1.13. There is a lot of conservatism in that number!
Is $20k per new aircraft too conservative?
Note that the List price of a new 737 is upwards of US$120 million, a new A320 upwards of US$100 as well, thus the $20k per new aircraft for sensors is probably nothing in the scheme of things, and way too conservative (especially if the maintenance and downtime saving by having APB fitted is say 90%).
I have no problems for those more attuned to the aircraft industry to point out all the holes in my first pass guesstimate of what the SMN share price could be based on a revenue model. Just recognise I've been conservative wrt sensor value per aircraft, and then discounted by 50% on yearly revenue.
How long is the piece of string revenue-wise? Bloody long!
Expand
(20min delay)