Thought that it would be a good time to provide a general update (my opinion only) on both the FA and TA fronts.
FA
Continues to improve each and every week IMHO. Here is a recap of the last month (for example).
4 weeks ago we learned that Xped signed a significant JV agreement for China Expansion (and that management expect to have other similar agreements in place with China and abroad). DeB was also released on Android (on schedule). Rumours surrounding possible agreement with Philips (given that we know that the Philips Hue light works with Xped's DeB).
3 weeks ago we learned that we are in 'next steps for commercialisation' discussions with Microsoft following Xped successfully showcasing multiple IOT solutions (including Xerts) at Singapore Microsoft Event.
2 weeks ago Xped launched their new corporate website. Some new information on the website revealed four new videos showcasing ADRC and potential applications, new brochures on ADRC, Xerts & DeB plus new and complete reference manuals for manufacturers.
Last week we learned that Xped received Platinum membership with the Open Connectivity Foundation (OCF). Among other benefits, Xped is now eligible to have a member elected to the Board Of Directors and participate and Chair in the Work Groups and Task groups.
Simultaneously, we also learned that the AllSeen alliance is to merge with the OCF, creating a powerhouse Foundation that now represents over 400 leading IOT innovators and developers including Intel, Microsoft, GE, Cisco and Samsung (to name drop a few of the heavyweights who Xped will be working with).
Last week we also learned that Xped is to acquire Codium (a locally based leading software developer). The integration of Codium is designed to extend Xped's IOT platform delivery capabilities to include Cloud Services, Big Data and Analytics. Regarded as a masterstroke by the gents at Vital Xense (thanks to @Portsmouth for his feedback btw), these new capabilities should also greatly assist Xped in the near term as it expands into China - for more info please refer to the Complex Semiconductor ann. dated 20/9/16 and the desire to obtain revenue from not only product sales and marketing, but also Device Data Capture, Analytics and 'potential recurring revenue streams based on Product Registration Service and Product Distribution to existing wholesale customer base'.
The acquisition of Codium will also provide immediate revenue for Xped and will compliment the early revenue generated by JCT. The Codium announcement from last week provided enough detailed information so that I could apply a mathematical formula by which a guestimated annual revenue for the past financial year could be extrapolated (approx. AUD$1.2million by my calculations). Note that is a guestimated figure only and is subject to certain assumptions, however I believe these assumptions are in line with my recent research on Codium.
Assuming my figures are relatively accurate, we could reasonably assume that with 50% organic growth (conservatively made possible via a new $500,000 facility) Codium's annual revenue for this current financial year could be somewhere @$1.8million. Immediate revenue for Xped in that instance would be @1.25 million (given the 70% ownership until Buyer's Call option or Seller's Put option is exercised).
If we then combine Codium's guestimate with JCT's guestimated revenue of $3 million (as per performance milestone 1 under the SPA), then Xped's revenue for this financial year from these two acquisitions alone could be @$4.25 million. Using a 'junior tech peer average' revenue multiple of 20, that implies a current valuation of AUD $85 million (or 4.1c per share) from these two companies alone. Yes, you read that correctly - that's slightly more than the current SP lol. And who was it that said that the market is always right?
But then.... if one factors in the potential upside via 'the rest' of the myriad of opportunities that exist through the likes of Telink, Intel, MOU's, Xerts, other members of the OCF, JV expansion into China with Complex Semiconductor, "Tier 1" and Auto accessory development opportunities and other new deals (keeping in mind that TMT have valued Xped's semiconductor business alone at 24c per share), then one can begin to understand the potential value for Xped within a 6-12 month timeframe. And even then they'll only just be getting started IMHO.
And so with all the FA developments that have taken place in the last 4 weeks I have had to re-design the wheel and spoke diagram to include additional spokes and space for new info, ultimately strengthening the FA wheel.
WAS
NOW
Continuous news flowfrom the above opportunities are anticipated in the near term, including updates on;
1.DeB App for IOS.
from 23/9/16 announcement (nearly 4 weeks ago) 'The Company awaits Apple’s verification and authorisation to release the Xped App on the Apple App Store. This release can take between 2 to 5 weeks depending on Apple’s backlog of processing and verification which is unusually long due in part to the new iOS 10 release and the fact that the Xped App needs to be tested against hardware (IoT Gateway) which requires Xped to provide evidence via a video that the software works correctly.' Also an update on: 'Available in English with Chinese language translation under way to cater for Xped’s target markets.'
2. Sale of Sokoria Geothermal Project update (potentially adding a further.
AUD$1.2 - $1.25m to the existing cash balance estimate (as shown in the FA snapshot toward the bottom of this update)
from 2/8/16 announcement (approx. 2.5 months ago) 'Following completion of due diligence, Orka has agreed to acquire 95% shareholding of PT Sokoria Geothermal Indonesia (“SGI”) from Xped and its JV partner PT Bakrie Power (“Bakrie”). Xped will divest its entire 45% shareholding in SGI and Bakrie will reduce its current shareholding in SGI from 53% down to 3% and remain a minority shareholder with Orka in the project development. Xped will receive consideration for the transfer in the nominal amount of USD$1 and assignment of accounts payable by Xped under the terms of the CSPA. Xped will be entitled to an additional payment up to USD$947,368 via payment commitment agreement between the parties.
The additional payment is payable to Xped within 30 days of the issuance of approval to the Notification of Intent to Develop the project (“NOID”) by PT PLN (Persero) (“PLN”) which remains subject to approvals under the Power Purchase Agreement and finalizing tariff concession with PLN for the 30MW project. The amount of the additional payment (up to a maximum of USD$947,368) will be determined by the finalised tariff and committed capacity.
......The sunset date for satisfaction of all conditions is 3 months after the execution date and failure to satisfy or waive all conditions by this date gives either party the right to terminate the CSPA.'
3. JCT update
from 2/9/16 announcement (6 weeks ago) 'TENDERS AND PROPOSALS UNDERWAY
JCT has recently made submissions on new tenders and proposals with its premium IP Nursecall technology. Whilst negotiations are still underway with a number of clients the probability of receiving $1.2m of orders in the next six months is high.
CHANNEL PARTNERS AND RESELLERS
JCT has been working to finalise agreements for the appointment of various Channel Partners and Resellers around Australia and New Zealand. These agreements once in place will assist the future growth of JCT through annual spend targets and uptake of JCT’s products and solutions. The appointments of approved partners and resellers are expected to take place in September with the company’s channel partner and reseller’s Australian network being in full operation by December 2016.'
4.
Column 1
1
from 29/4/2016 quarterly reportMOU’S SIGNED WITH US LISTED CHIPSET COMPANIES;During the quarter, the Company captured high‐level interest from two major US listed chipset and technology companies, both of whom have significant market capitalizations and global footprint in their respective fields. The Company appreciates the level of interest surrounding these US listed chipset companies and the potential they can bring to Xped. Presently both MOU’s are non‐binding in nature and both parties have entered into an understanding to work with one another on incorporating ADRC into product offerings. The MOU’s also restrict releasing any details including identify of the listed company, and the Company continues to honour this request whilst it continues to develop stronger relationship with each party. Recently the Company began working on porting across ADRC technology from its lab environment and onto product lines of both US listed companies. Upon the success of the ADRC porting and integration the Company would seek to enter into a formal agreement which amongst other commercial elements of the terms would allow the identification of the US listed companies.
5.
Column 1
1
from 4/8/2016 company update
2
CUSTOMER BUSINESS DEVELOPMENT UPDATE
3
Following recent Business Development meetings the Company has been requested to develop a Bluetooth® solution for a potential high volume automotive audio accessory product offering.
4
Xped is now currently finalising software integration and design for this automotive audio accessory product and the Company expects to demonstrate its solution to the client during August. The prospective client (consumer electronics manufacturer) has seen the potential in the Xped “Device Browser” APP and ADRC platform.
5
In addition Xped is in the final stages of development for a smart home lighting solution that will be presented to a “Tier 1” manufacturer in the near future.
6
The above mentioned opportunities highlight some of the first joint marketing efforts that Xped and Telink are collaborating on.
7
Xped will now aim to progress these opportunities for both first revenue and active subscriber uptake for its “Device Browser” APP
6.
and Xerts update.
Column 1
1
from 26/8/2016 company update
2
TELINK SEMICONDUCTOR
3
Chris Wood and his team of developers returned this week from China following
4
a visit to Telink’s facilities in Shanghai. The visit was to further progress the porting
5
of ADRC stack onto Telink’s IoT chipset[/B]. Working together with Telink engineers,
6
Xped engineers were able to port the RNP firmware used in ADRC Hubs whilst in
7
China; a significant milestone in the porting of ADRC to the Telink IoT chip.
8
Having resources together allowed both teams to share internal knowledge to
9
complete the work on hand and explore potential development work on other
10
opportunities and alliances being presented under the collaboration agreement.
11
One area that both Telink and Xped have agreed to explore is the addition of
12
Telink’s patented BLE Mesh technology as a new transport layer for ADRC, thus
13
allowing Bluetooth devices to be controlled from the one Device Browser app.
14
XERTS DEVELOPMENT
15
The Company has been working with NextFaze Pty Ltd to develop its first release
16
of Xerts running on Amazon Web Services (AWS). Xped began development of
17
Xerts following the relisting and with patents granted provides a system to deliver
18
digital coupons to consumers. The Company expects to be able to demonstrate
19
the Xerts working system in September (tick). Following the release the Company will
20
begin engagement with parties who can utilise the technology (we now know those 'parties' include Microsoft).
7.
Column 1
1
from 26/8/2016 company updateINTEL UPDATE
2
Xped recently provided demonstration kits of its ADRC solution to Intel
3
engineering team in Taiwan. The Intel team are now looking at next steps
4
including Xped demonstrating the solution to Intel’s OEM/ODM accounts that
5
could potentially utilise the technology. Xped will update the market as any
6
progress is made.
Potential IOT applications for Xped. We often refer to the 'Smart Home' when we discuss the Internet of Things.
However the possibilities for Xped across numerous 'settings' are literally endless.
But why Xped and why ?
Finally, see updated FA snapshot below, noting that BRN's current Enterprise Value is more than $100m greater than the EV of XPE, and RAP's current EV is more than $200m greater than the EV of XPE. TA
Last time I opined on the TA in depth, I was both surprised and stoked to pick up some more shares at 4.8c. However I also mentioned at the time that oversold indicators could remain oversold for an extended period of time and that there were no guarantees of an immediate reversal.
Well here we are three and a half weeks later and the indicators are now even more oversold than they were back then (in most cases). However now there are some further signs of a bottom here. So yesterday I rounded up some more cash and purchased yet another parcel at 3.9c (almost a full cent cheaper than my 4.8c purchase).
Things are certainly getting very interesting on the XPE charts and personally I’m quite excited about it.
A couple of months ago (after the announcement of Martin Despain’s appointment as MD and the resignation of John Stefenac) some of you may recall that that almost everyone (it seemed) was calling for the gap to be filled at 3.5c. As it turns out it didn’t happen then and instead many missed the 3 cent follow up rally from 3.8c – 6.8c.
Well here we are again and surprise surprise, we’re hearing the same thing from the usual suspects. But again I have my doubts as to whether the gap needs or wants to be filled, particularly after today’s bullish continuation from yesterday’s low. For the moment at least, it remains as a breakaway gap.
3.8 cents has historically been a key resistance come support area and very few shares were sold at that price yesterday (even though we touched it twice). This tells me that traders and other opportunists are not willing to chance a sell at this key support level for a better price (at least for now). Thus I am calling for 3.8c to hold (at least for this week) and there are some good technical arguments (i.e. apart from the solid FA) as to why 3.8c could well be the low in the current cycle and possibly forever (refer to the below charts and the observations within).
Here's another look at the Daily chart below - this time in an attempt to determine current 'fair value' from an historical TA perspective using timely VWMAs. Also note the average length of previous sub corrections (shaded) within the current corrective cycle as well the new all time record of 11 consecutive days without registering a green candle (until it did so today but please note that today's data is not shown in any of the charts above or below).
Weekly chart and observations
Monthly chart and observations. @eirexpat , this one's for you since last week you asked my thoughts on where we could be heading in the coming months. Note the rising blue resistance line - current resistance target is @15c but increasing to @17.5c by January (assuming the current horizontal overhead resistance at 11c is broken).
I hope that at least some of the above helps with your own research and analysis however please read the disclaimer below as I'm often far from being perfect.
GLTA
Cheers
Elpha
p.s. @Inductor
The next little climb to our Swiss mountain base camp must be awfully close by now
?
(20min delay)