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  • Writer's pictureMark Watson-Mitchell

Seeing Machines – big improvement expected this year

On Tuesday morning the advanced computer vision technology group Seeing Machines (LON:SEE) updated its investors to expect a 49% increase in revenues for year to end June – which would be at the top end of market expectations.

The group recorded a 27% increase in its annualised recurring revenues, year on year, to $13.6m.

It ended its Trading Year with a strong balance sheet boasting some $36.8m in cash.

The Business

The £248m capitalised group, which is headquartered in Australia, also has offices, USA, Europe and Asia.

Set up some 23 years ago, the globally operating company supplies technology solutions and services to industry leaders in each market vertical.

It is an industry leader in vision-based monitoring technology that enable machines to see, understand and assist people.

The split-down on its 2022 turnover the group sold some 73.1% to the Aftermarket, while the OEMs took the balance 26.9% of sales.

The geographic breakdown saw North America account for 40.3% of turnover, Australia 34.6%, Asia-Pacific (non-Australia) 12.2%, Europe 7.9%, with elsewhere taking 5.0%.

Its Technology

The company is revolutionising global transport safety.

Its technology portfolio of AI algorithms, embedded processing and optics, power products that need to deliver reliable real-time understanding of vehicle operators.

The technology spans the critical measurement of where a driver is looking, through to classification of their cognitive state as it applies to accident risk.

Reliable ‘driver state’ measurement is the end-goal of Driver Monitoring Systems (DMS) technology aiding drive safety for Automotive, Commercial Fleet, Off-road and Aviation.

Fourth Quarter Advance

In the Q4 key performance indicators the group has highlighted that over the last year it has increased the ‘cars on road’ figure by 143% to 1,086,176 units.

It is now on an annual production volume of 638,951 vehicles, a clear 101% uplift.

The ‘Monitored Guardian’ connections were 30% better at 51,975 units for the last year.

The company also reported that its total Guardian hardware sales were 14,779 units, with some 10,000 being recorded in Q4 alone.

Management Comment

CEO Paul McGlone stated that:

"We are very pleased with the progress made during what was a record quarter, and throughout the year, across both our Automotive and Aftermarket divisions.

Crossing the 1m threshold for the numbers of cars on the road with Seeing Machines' technology installed, up 143% year on year, represents a major milestone and a great achievement.

With supply chain constraints now easing, our Guardian business continues to go from strength to strength, with over 51,000 heavy vehicles now connected, an annual growth rate of 30%.

We can now expect Aviation to be a meaningful contributor to the Company's revenue and looming regulatory deadlines are driving the rapid adoption of Driver Monitoring Systems by automotive manufacturers.

Our per-unit, margin accretive royalty model leaves us well positioned to capitalise on the opportunities ahead."

The Equity

There are 4,156,019,000 shares in issue.

The larger holders include Lombard Odier Asset Management (15.37%), VS Industry (9.44%), Federated Global Investment Management (9.27%), Herald Investment Management4.42%), Richard Griffiths (4.02%), Killik & Co (3.71%), The Independent Investment Trust (2.21%), Chelverton Asset Management (1.81%) and Polar Capital (1.34%).

Brokers View – the shares are a Buy with a 23.8p Target Price

John-Marc Bunce at Cenkos Securities rates the group’s shares as a Buy.

His estimates for the last year to end June are for $53.5m ($35.6m) revenues, with slightly lower pre-tax losses of $15.2m ($16.9m).

For the current year he sees $62.6m sales, and a substantially reduced loss of just $6.6m.

The big turnaround he forecast will occur in the year to end June 2025, with sales lifting to $85.2m and a break into $15.0m adjusted pre-tax profits, worth 0.3c per share in earnings.

On a consensus basis, there are four analysts that follow the group, each of them rating the shares as a Buy, with the average Target Price being 22p.

My View – potential for a quadruple upside

The group is expected to announce its audited year end results on 16th October.

With this company’s shares trading at just 5.95p after yesterday’s Update, they are offering patient investors a strong upside to anywhere close to the Cenkos Securities Target Price, which would see them quadruple in value.

However, I now set a short-term Target Price of 7.5p.


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