SMN 1.82% 54.0¢ structural monitoring systems plc

It is a buy!

  1. 932 Posts.
    lightbulb Created with Sketch. 125
    There were 6 shareholders at the A.G.M. & after the necessary resolutions were passed we were able to ask a number of questions.

    In attendance were Toby Chandler, Will Rouse & Sam Wright plus three others in the audience.

    Toby comes across as a very personable character & easy to like. He is outgoing & enthusiastic.

    Will is more of a facts & figures man who is new to the company & instrumental in administering the Anodyne takeover.
    He is a quieter but also likeable character.

    Sam administered the 12 resolutions well & again is a good guy. Sam has been with the company for many years but surely must be older than his youthful looks. He barely looks 40.

    After the AGM about 9 of those in attendance adjourned to the bar for a few bears. Shareholders were well looked after.

    Now down to business.

    It would appear that before the Delta fleet can be fitted with sensors, SMN needs to gain OEM/Regulator approval for numerous applications on all types of aircraft. This may take weeks & even months. Once this has been achieved the sensors can start being fitted to the Delta fleet as each aircraft comes in for its major inspection.

    Apparently, other airlines are very eager to adopt the technology so we should expect additional contracts to follow.

    2018 is expected to be a very significant year in the history of SMN. The Anodyne takeover has placed SMN in a very good position with many airlines already AEM clients & with the current AEM employees already on board it saves SMN over $1 million in training new employees. AEM employees can be switched over to manufacture sensors when additional labour is required to fulfil orders.

    Toby was trying hard to control his enthusiasm.

    Toby explained why he sold at $2.65 & why the apparent ramp-up occurred.

    For Toby, it was a commercial decision. Not only had the share price exceeded its true value but he was not receiving much in the way of directors fees & needed the cash for investments in two other companies. He also had to attend to that personal matter.

    The reason why the Delta deal did not materialize "well before Christmas" is that by delaying it, SMN was able to negotiate a much better deal.

    As airlines take up the technology, they will be charged $x dollars per annum for each aircraft fitted with sensors until they have their entire fleet fitted. Consequently, a tier 1 airline will eventually be paying, in the order of, $10-15 million per annum. This will take some time before maximum revenue is obtained.

    In time, a share price of over $20.00 was mentioned as an expectation.

    The current expectation is for the payment of dividends to start within the 2018-2019 financial year. While SMN has tax losses in the order of $50 million, the payment of fully franked dividends will be paid. Once the tax losses have been exhausted fully franked dividends will then come as a result of tax paid. The other alternative will be a share buy-back which will further increase the share price.

    The price charged per aircraft for sensors will be in the tens of thousands of dollars. ($20-$50 thousand).

    The cost of manufacture of sensors is negligible in comparison to the price charged which means probably 90 odd percent profit.

    The ongoing cost to run SMN should be in the order of $1 million & other than to look for other business prospects like bridges, pipelines etc. which would be a long way down the track, the majority of profits will be paid out in dividends & later used for buybacks.

    Toby, while trying to be cautious, could see no obvious reason why SMN should not become hugely successful.

    Toby was asked if he had sold any SMN shares since August & he replied that he did not recollect doing so but had actually bought more in the recent capital raising.

    It should all happen & it is only a matter of time. Revenue, in addition to the Anodyne business, is expected to flow in 2018.
 
watchlist Created with Sketch. Add SMN (ASX) to my watchlist
(20min delay)
Last
54.0¢
Change
-0.010(1.82%)
Mkt cap ! $65.74M
Open High Low Value Volume
53.5¢ 54.0¢ 51.0¢ $134.4K 257.9K

Buyers (Bids)

No. Vol. Price($)
1 10000 53.0¢
 

Sellers (Offers)

Price($) Vol. No.
54.5¢ 2000 1
View Market Depth
Last trade - 15.39pm 10/08/2020 (20 minute delay) ?
(live)
Last
52.5¢
  Change
-0.010 ( 4.55 %)
Open High Low Volume
53.5¢ 53.5¢ 51.0¢ 9313
Last updated 14.27pm 10/08/2020 (live) ?
SMN (ASX) Chart
arrow-down-2 Created with Sketch. arrow-down-2 Created with Sketch.