TTT remains a high risk investment and is heavily reliant on the sale/leasing of its machines and or the development of its production bureaus to generate earnings. TTT’s Melbourne facility is a production bureau.
If successful TTT will be able to establish an annuity stream through powder sales, spare parts ongoing research and development and possible royalty streams. The recently announced options for customers may fast track potential sales activity.· TTT announced a loss of $3.6m for the half year to 31 December 2018 this compares to a loss of $1.6m in the PCP. Cash levels fell by $3.6m in the half to $6.7m. to move to the next stage of development the company may need to raise equity.· Since listing TTT has been relatively disciplined in following its business plan. This has been evident by the number of collaborative agreements and MoU’s it has entered into. There are several ongoing commercial contracts such as with TAUV (contracted revenue of $1.8m exclusive defence program) which is well progressed. A successful completion of phase III will lead to the sale of TKF automated production line system to produce each product using TKF patented process. The bicycle automated production line is on schedule and on budget. and is expected to be able to manufacture up to 3K-4K bycle frames pa.· In the Dec Qtly report the company highlighted an expansion to its business model offering leasing of systems and utilisation of TTT owned production bureau. This should be seen positively as it shows the company is prepared to evolve and grow to accommodate needs of its customers· The balance sheet remains in reasonable shape with net cash and net cash equivalents of $6.7m as at 31/12/18. However, the company experienced a net decrease in cash of $3.6m in 1H19. With the elevation in staffing costs and lease liabilities we would expect the cash burn to remain around these levels in the foreseeable future. 2h19 will be assisted by a research and development tax refund estimated to be in the vicinity of $2m. Capital commitments at the end of 1h19 stood at approximately $1m and 1 year forward lease commitments were approximately $390K·
Our Base Case DCF is heavily reliant on TTT being able to sell 2 machines/processes per half year over the forecast period. This generates a valuation of $3.08 per shareFY’20F METRICS PER 41.9x | EV/EBIDA 39.6x | Yield Y.Y% N/ALINK TO Research NOTE Titomic (TTT) PAC Partners - 25 page reportINVESTMENT VIEWTTT has world leading technology which could prove to be extremely disruptive to traditional manufacturing once it has been commercialised. Our base case valuation is $3.08 per share but heavily reliant on the commercialisation of its technology. The company has cash assets of $6.7m as at 31/12/18.company Background·
The closest commercial opportunity lies with TAUV and TTT’s automated production line. The opportunity is well progressed with TAUV moving to phase 2. The current automated production facility is still some way off but is expected to manufacture up to 3K-4K frames per annum within 12 to 18 months.· TTT is heavily reliant on the leasing or selling one of its machines or the development of production bureaus to generate earnings. Until this occurs it remains a high risk investment. However, once the company sells/leases a machine or sets up a production bureau it will establish an annuity stream through powder sales, spare parts and ongoing research and development.
Cash burn is real peeps. no news, more appointments in recent quarter and announcements isn't mentioned in this update so i would say that's another outgoing chunk of cash for them.
I predict next update is TUAV which couldnt come soon enough, if they get this to the market before June 30, maybe... maybe 1.60 will hold. If they don't and nothing else comes to light (sale of machine or production of parts/commercial agreement) firesale continues.
my two sale prices of 2.02 & 2.08 seems a long time ago... 2.60 seems a world ago!
this week & next week are crucial IMO - Cap raise must happen soon if they want to salvage a bit of confidence amongst long term holders.
interesting times ahead that's for sure!
(20min delay)