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Stocks’ Details
Department 13 International Ltd
Benefitting from distributions of MESMER: Department 13 International Ltd (ASX: D13) is a developer of counter drone technology that focuses on wireless and mobile platforms to create solutions that transform networks and communication. Department 13 is based in Maryland, USA which has research and development contracts with multiple US government agencies. Over the first half of FY18, the group has delivered topline growth of 391.3% to $2,230,452 Mn. Topline increased substantially during the period as the group built and shipped its first commercialised IP, MESMER, in scale and sold 9 units during the same period. Gross profit grew by 209% to $977,963 in 1HFY18 from $316,873 in 1HFY17. However, net loss after tax for six months to 31 December 2017 was $2,668,923 against $2,102,741 in 1HFY17. For the first time since listing, the group recorded positive operating cash flow of $289,000 for the December 2017 quarter. Additionally, the company received purchase orders from existing customers on two units, which were slated for settlement in the March 2018 quarter. Besides this, the group has signed exclusive distribution agreement with pre-eminent Japanese technologies and equipment distributor Nippon Kaiyo. This exclusive distribution agreement will help it to grow the number of distributions of MESMER. In the early February 2018, the group announced a proposed placement of up to $12 Mn in secured convertible notes which convert at AU $0.10 per share. Recently, D13 has successfully placed $7 Mn of the first Tranche of convertible notes. This fund will be used to invest in demonstration units, scale up marketing and sales efforts and contribute sufficient working capital to facilitate D13’s growing pipeline of sales opportunities and support the company’s recent purchase of the Carrier Interferometry Patent Portfolio. The share prices were down by 14.3 per cent in the past six months but managed to climb up by 4.7 per cent in the past three months as at April 03, 2018. We give a “Speculative Buy” recommendation on the stock at the current market price of $0.09
Department 13’s MESMER Platform (Source: Company Reports)
Mobilicom Ltd
Rapidly Growing Market: Mobilicom Ltd (ASX: MOB) is high-tech company that designs, develops and markets solutions for mission critical and remote mobile private communication networks without the need of any infrastructure. Mobilicom’s products and technologies are based on an innovative approach that merges 4G and Mobile MESH technologies. The group operates under two separate business entities i.e., Mobilicom and Sky Hopper, and the latter offers a high-end component provider for drone market. The company completed its initial public offer (IPO) on the Australian Securities Exchange and raised $7.5 Mn through IPO. This fund will help to grow its activities in both Government and Enterprise with solutions from Mobilicom business entity. As a result of the capital raising, the company has increased its cash reserves to $8,077,472 at 31 December 2017. The company had a net asset position of $7,338,414 as compared to net deficit at 31 December 2016 of $85,760. This reflects that the company has a sound position which will help to implement the company’s plan in years to come. Over the period, the company received government grant from the Israel Innovation Authority for its projects and it is valued at $650,000 for 2018. However, the loss for the consolidated entity after tax amounted to $6,089,936 in FY17 against $443,355 in FY16. Further, there was no dividend paid, recommended or declared during the period. Mobilicom has continued to drive success with its core business. The company has reached a base of more than 40 customers across 15 countries. Meanwhile, theshare prices were down by 38.5 per cent in the past six months and plunged about 9.4% on April 04, 2018. We give an “Expensive” recommendation on the stock at the current market price of $0.075, and look for more potential catalysts.
DroneShield Ltd
Multiple Drone Products expected to Drive Growth: DroneShield Ltd (ASX: DRO) is a worldwide leader in drone detection technology, and the group reported 268% YoY (year on year) growth in revenue from continuing activities at $310,724 in 1HFY18. However, the group incurred losses of $5,476,613 and net cash flow outflows from operating activities of $5,131,794 with cash on hand at 31 December 2017 of $2,362,894. Recently, the company successfully completed placement and raised $2.55 Mn. This fund will be used for further development and integration of detection and countermeasure technologies, increase inventory to tackle upcoming demand, increase working capital and expansion internationally through sales and marketing efforts. While, Bergen group and Eugene Tablis, a substantial holder of DroneShield changed holding from 39.13% of interest to 36.11%, we expect that the group will benefit from the sale of DroneGun, DroneSentry and DroneSentinel products within the next 12 months and beyond. Meanwhile, DRO stock has fallen 26.4% in past one month and was down by 13.33% in past five days as on April 03, 2018. Based on the foregoing, we give a “Hold” recommendation on the stock at the current price of $0.19
UUV Aquabotix Ltd
Rising Underwater Drone Market: UUV Aquabotix Ltd (ASX: UUV) is an Australian and USA based underwater drone manufacturer and seller company. The group has recorded loss after tax to $4,559,109 in FY17 against the profit of $115,694 in FY16. The company has raised $7,000,000 through IPO which will be used for expansion of distribution network, change management team structure and debt facility reduction over the period. Cash receipts from customer for the December quarter were $227,754, up from $187,239 in the previous quarter ended 30 September 2017 and up from $35,592 in the second calendar quarter of 2017, contributing to a lower net cash outflow in the quarter compared to the previous quarter. In addition to this, the group had a cash balance of $3,887,828 in FY17 with debt free status. Recently, the group appointed Mr. Robert Clisdell as a non-executive director. As per the company report, the industry fundamentals remain decent with the Unmanned Underwater Vehicles (UUV) market and it is estimated at US$2.69 Bn in 2017 and projected to reach US$5.20 Bn by 2022, reflecting CAGR growth of 14.07% from 2017 to 2022. Meanwhile, UUV stock has fallen 36.80% in past six months but was up by 5.33% in past five days as on April 03, 2018. Looking at the financial performance and trading scenario, we give an “Expensive” recommendation on the stock at the current price of $0.079
UUV Addressable Market (Source: Company Reports)
Xtek Ltd
On Track Performance: Xtek Ltd.’s (ASX: XTE) stock surged up about 2.479% on April 04, 2018 with the release of a Change of Director’s (Uwe Daniel BOETTCHER) Interest Notice entailing acquisition of ordinary shares (16,151) through on market trade. XTE is an Australia-based company, focussing on the supply of Homeland Security products and services to Defence and Law Enforcement agencies across Australia region. The group achieved record revenue growth of 468% to $5,284 thousand in 1HFY18 from $1,130 thousand in 1HFY17. Further, loss after tax came at $659 thousand in 1HFY18 from $1,339 thousand in 1HFY17. This positive improvement resulted from reduced deliveries during the period. The company holds A$4.56 Mn in cash as at February 21, 2018 and remains well funded to pursue its strategy for the rest of FY18, following the completion of its share Purchase Plan (SPP) in June/July 2017. The company enjoys debt free status. We expect that its order intake will continue for the rest of FY18 and the company is well placed to secure further contract wins for the supply of Unmanned Aerial Systems (UAS), Explosive Ordnance Disposal (EOD) equipment and tactical robots for the Australian Defence Force and law enforcement agencies. Moreover, the company is on track to achieve its FY18 revenue guidance of A$11 Mn to A$18 Mn. Meanwhile, the stock price has been up by 39.08 per cent in the past six months as on April 03, 2018.We give a “Speculative Buy” recommendation on the stock at the current market price of $0.62
Exponential Revenue Growth (Source: Company Reports)
IOT Group Ltd
Strategic Agreement: IOT Group Ltd (ASX: IOT) is an Australia-based company, focussing on developing and designing a range of selfie drones. The group has recorded consolidated loss after tax of $8,335,229 in FY17 against $15,042,200 in FY16. The net asset of consolidated group has decreased by $4,760,819 from 31 December 2016 to $1,966,655 in 31 December 2017. This decline is largely due to loss for the period of $8,335,229 and partially offset by capital raising of $3,031750. However, the group incurred operating losses of $8,335,229 and negative cash flow from operating activities of $8,828,645 with cash on hand at 31 December 2017 of $923,186, was reported. Recently, IOT Group issued 1,031,250 fully paid ordinary shares at a deemed issue price of $0.08 per share to Max Markson. On the other hand, the group has signed an agreement with Runa Pty Ltd. IOT group is holding 25% interest in RUNA for a consideration of $250,000 in cash, plus $350,000 in IOT shares or cash. The objective of this agreement is to expand its Internet of things (IoT) product line space, making a strategic investment in the unique purchase, delivery and pickup platform, RUNA. This deal will help to boost sales and marketing activity in years to come. The group has also appointed new members including Wooyoung Joo to the IOT Blockchain Advisory Board. Meanwhile, the share prices were down by 44.0 per cent in the past six months as at April 03, 2018. It is too early to decipher worth in terms of future potential, and the stock seems to be “Expensive” at the current market price of $0.005
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