What value AEM?, page-2

I thought it worthwhile to open this old thread for this post, as the subject heading aptly fits the thrust of the post.

Until we got news of CVM getting close to approval (yes it was just over 6 months ago) we were reliant solely on AEM news to keep the wolves at bay. And AEM delivered very well - contrasting with most other airline-related stocks being forced to raise considerable equity to cope with a total industry on its knees. SMN on the other hand was able to rely on cash flows from AEM, augmented by small Employee stock issues, to keep the lights on, and actually to increase gross revenues - granted, the fact that AEM had a number of customers in the emergency area that kept going during the pandemic was most fortunate, but regardless AEM prospered.

Now we can recognize the AEM business, outside of CVM applications, as a serious contributor to SMN bottom line. And likely growing well beyond its recent past performances. In the Feb 2022 Half Yearly the company acknowledged that AEM has had a number of issues to contend with, not the least of which was the move to a larger, more streamlined facility at Kelowna requiring relocation of all work processes, staff, plus the added complication of the Eagle Audio acquisition. Clearly the fact that first half top line revenue was below but close to period on period performance demonstrates the capabilities of AEM staff to perform under considerable constraints, not to mention the increasing complexity to contend with supply issues that is facing most industries - the concept of "just in time" work efficiencies has been thrown out as the best solution in today's supply chain challenges.

The quarterly update, not expected for another 7 - 8 weeks, will be an interesting read, based on the Half Yearly comment:
"The order pipeline for the third quarter is stronger than the first two quarters, driven primarily by the AEM audio line of
products. Customer enquiries have noticeably increased and sales staff have recommenced travel which has been largely nonexistent for the last 2 years. I'd imagine that with the move to Kelowna only just being finalised in the third quarter that we won't get a full quarter of production until the following quarterly, at which time presumably Eagle Audio product will be also a significant contributor to the revenue figures in a meaningful way - remembering that at the time of the acquisition announcement "SMN Group gains annual top-line sales increase of ~$A3.500 million and exceptional, baseline EBITDA addition of circa-$A2.200 million per annum (per last 3-year actual averages)".

I think most would agree that AEM has underpinned the share price of SMN as it touched 50 cents a couple of weeks ago, but actually likely to contribute meaningfully in following quarters to possibly support a share price closer to 60 cents, and building. That suggests to me that whilst CVM has always been considered to be the backbone of SMN, its initial contribution doesn't have to do much to help the share price move towards $1.00. What will probably facilitate the initial share price moves upward will be the announcement of certain breakthroughs with CVM contracts rather than actual production revenues.