Stratech Group

[littleones]

60 airports
2% x 10,000 = 200 airports with possibility of FOD automation.
If Stratech manages to corner 30%, 0.3 x 200 = 60 airports.
Finally, "20 airports" at steady state is assumed.

Net Profit Margin
Is 20% NPM an unreasonable assumption?
http://pages.stern.nyu.edu/~adamodar/New...argin.html

Spreading of contract value
many tks for the suggestion. Will spread $47mil over 7 yrs.

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I'm not sure if you understand the difference between installation and maintenance. Installation revenue is lumpy while maintenance is low but stable revenue. For the record you can't average out the lumpy revenue over 7 years and get a good picture. In fact post installation, the upgrade of Changi Airport is not going to be near the installation value.

But's let's just assume for discussion sake we use your back-of-envelope figures rather than the figures I posted
http://www.valuebuddies.com/thread-6382-...#pid112212

There are 2 major variables in your projection. One is the number of airports and the 20% NPM. As we know over the past 6 years since deployment with Changi Airport, they have been awarded with Dubai and HK. The other 3 airports are testing and trial stage? Based on this track you are expecting them to do 20 airports ANNUALLY steady state? As for the NPM, during 2009 and 2010 when Changi started, the Profit Margin was about 7.9-8.6%. the significance of this is that if we revise the NPM to say 10% and 5 NEW airport installation wins (which they already have 2) for say FY2016 (so that your average revenue assumption makes more sense) to have earnings of $0.9m/2 * 5 = $2.25m and we will have your scenario d. $22.5m market cap and roughly 1.5cts share price, what it was trading prior to share swap.

Since we are looking at history, this company basically lost all the IPO monies in first 3 years and proceeded to lose $100m next 10 years including rights monies.

BTW with ref to the previous postings on revenue recognition, do note that Stratech uses an unusual fiscal year for Singapore companies but usual for Indian companies ie for year starting 2015 April it is for FY2016

You should not use 2009 as the starting point as that is the year FAA did an extensive testing of the iFerret over a one year period before giving its approval to iFerret in 2012. So the actual starting point for commercial award of contract should be from 2012 onwards. Since then it got 3 contracts. Besides the 6 runway airport, I understand iFerret is also extensive tested in Miami, Doha (Qatar) and Colombo. Currently the USAF is integrating iFerret BDA with their BDA software