Undervalued / Under radar tech stock, page-37

https://www.land.vic.gov.au/maps-and-spatial/maps-and-spatial-news/landmark-investment-to-create-state-wide-digital-twin
]Victorian government announcing $35.2 mil for state wide digital twin over the next three years.

• Announcement was yesterday
• Increased from $2mil in 2021 budget
• For the platform, CSIRO's Data 61 is being used (same as Western Sydney digital twin, seems project is similar in nature except state wide.)
• Platform will be accessible from late 2021, adding of full suite of spacial datasets will be more gradual

To put that into perspective, the Western Sydney digital twin which was a pilot program generated about $500,000 in revenue for Aerometrex.
I'll explain my working for the figure at the bottom.

Aerometrex Relationship with Vic Gov. for Digital Twins
Strong possibility Aerometrex will be involved in the capture of this project given they have been used by Vic gov. in pretty much all there other large scale 3D / digital twin projects.

To demonstrate this I will list prior smaller scale digital twin projects from the past two years:

Fisherman's Bend (https://www.tenders.vic.gov.au/contract/view?id=186499)

• Referenced as pilot project in this announcement
• $130,029 to Aerometrex
• Completed Dec 2019

Great Ocean Road (https://www.tenders.vic.gov.au/contract/view?id=185873)

• Featured in announcement video
• $149,600 to Aerometrex
• $251,790 to AAM Group for LIDAR (https://www.tenders.vic.gov.au/contract/view?id=185963)
• Mar to Dec 2020 contract term
• 
  

Bendigohttps://www.tenders.vic.gov.au/contract/view?id=88343)

• $110,000 to Aerometrex
• $1,100,000 to AAM group for web mapping platform including other regional cities
• Nov 19 to June 2020

Based on the projects listed above, Aerometrex is primarily being contracted for higher resolution urban imagery and likely will not be involved in the capture of lower resolution regional areas.

Main competitors are AAM Group (city models, LIDAR, involved in regional project, GeoCirrus platform), Urban Circus (smaller scale digital twins, has produced 3D models as per website)

Potential Financial Benefit for Aerometrex
A good point of reference is the NSW Gov. Western Sydney Digital Twin captured by Aerometrex, this was a pilot program for a state wide digital twin completed in early 2020.


In H1 2020FY, there were two major 3D capture projects namely City of Pau France & the Western Sydney Digital Twin.
So as can been from the above graphic from the prospectus (Dec 2019), the Western Sydney project is about 64% of Pau + Western SydneyCalculated as 9%/(5%+9%)




From the H1 2021FY presentation, 3D segment slide above it states that isolating the Pau & Western Sydney revenue from H1 20FY would see H1 21FY having only a 5% decline.
If you divide $711m (H1 21FY 3D revenue) by 95% = 3D revenue in H1 20FY excluding Pau & Western Sydney.

• Therefore, 3D revenue in H1 20FY excluding Pau & Western Sydney. = $748m
• 3D revenue from Pau & Western Sydney (H1 20FY) = Total H1 20FY 3D Revenue - 3D revenue in H1 20FY excluding Pau & Western Sydney
• Therefore, 3D revenue from Pau & Western Sydney (H1 20FY) = $1,695m - $748m = $947m
• Since the Western Sydney project was 64% of the combined project value, its value can be inferred as $609m in revenue to Aerometrex.

To give you an idea of the scope of the Western Sydney Project relative to the statewide project:

• Pilot program for statewide digital twin project
• Covers eight local government areas
• There are 128 local government areas in New South Wales
• 3,396 sq km captured by Aerometrex
• For comparison Greater Sydney has total site area of 12,368 sq km, including other regional city centres it would be even more
• In my opinion a statewide project, could result in excess of $2m in contract value for Aerometrex if it is the primary supplier for the capture in urban areas.

IMO, It is probable the NSW Government will follow suit to Victoria, EY have been contracted to build the business case for a state wide digital twin (due June 2021) and also a tender for technical components has been issued (closes June 2021). An announcement regarding this could potentially be issued in the next few months with the platform already developed from the pilot program.
https://www.tenders.nsw.gov.au/dcs/?event=public.rft.showArchived&RFTUUID=0A7CFFF6-A99C-5C94-1B7A7DB4F7B80650
Global Trend of Smart Cities & Digital Twins

Researchers at Markets &Markets reported that the Digital Twin industry generated USD$3.1 billion in revenue around the world (2020), and is projected to growto USD $48.2 billion by 2026, at a blistering CAGR* of 58%ABI research, reported that 500 cities will be using some sort of urban twin by 2025 in comparison to a handful presently.

Large scale digital twin projects around the world:

• Singapore: Virtual Singapore Project - $73m live digital twin
• UK goverment: National Digital Twin Program
• China: Shanghai digital twin
• Finland: Virtual Helsinki (https://www.unrealengine.com/en-US/spotlights/building-virtual-cities-and-digital-twins-with-unreal-engine)
• New Zealand: Wellington digital twin https://buildmedia.com/work/wellington-digital-twin

Whitepaper by Cityzenith on digital twins: https://cityzenith.com/whitepapers
Article: https://www.linkedin.com/pulse/smart-city-future-alexander-skhiri/
https://www.unrealengine.com/en-US/spotlights/a-virtual-clone-of-adelaide-for-digital-twin-and-smart-city-applications
https://www.programmersought.com/article/51728683227/
https://www.linkedin.com/pulse/smart-city-future-alexander-skhiri/
https://www.unrealengine.com/en-US/spotlights/51world-creates-digital-twin-of-the-entire-city-of-shanghai https://www.asme.org/topics-resources/content/smart-cities-look-for-digital-twins
https://www.spatialsource.com.au/latest-news/digital-twin-technology-for-sustainable-future-cities
https://www.unrealengine.com/en-US/spotlights/51world-creates-digital-twin-of-the-entire-city-of-shanghai

The leading firm in this space appears to be 51world a chinese company who have constructed numerous models including Shanghai & Singapore.
Most ambishous project is an Earth clone...
https://www.programmersought.com/article/51728683227/
https://www.linkedin.com/pulse/smart-city-future-alexander-skhiri/
https://www.unrealengine.com/en-US/spotlights/51world-creates-digital-twin-of-the-entire-city-of-shanghai

IMO, Aerometrex are positioned to benefit from the potential state wide projects domestically in particular fulfilling the niche of higher res urban imagery. If they can obtain large projects from the NSW & VIC digital twins it should be catalyst for a rerate of the 3D segment and terminal value of the co.

Globally its hard to discern the competiveness of their models, it seems other projects are focusing on 'live' digital twins incorporating satelite imagery which is impractical with Aerometrex's capture methodology.

Currently trading at about 2.3 EV/forward revenue, as a speculative buy based on these emerging trends. I believe there is an imbalance between the upside potential and downside.