Its been a while in the making, however I have finally have been able to do a writeup about them as I no longer work in the industry. I also wish I could have put my capital into the business when they were at 50c. 

Why I like the business

• A great business who are well regarded by their customers in Australia
• They provide a solution to reduce the prevalence of driver distraction
• A company who have a strong focus on innovation (they moved out of Redflex to push a heavier innovation agenda in a new company.
• State Governments (typically in Aus) are reliable customers and pay promptly.
• A supply on demand model, with camera equipment manufactured on order once contracts have been executed and inventory managed accordingly.
• Acusensus have established their system to integrate with all of their customers, and any new contracts will not need the technical resourcing to roll out new devices in the future.
• Have now achieved their ISO 9001and 27001 compliance, which will help put them in good stead to win future contracts
• A non loop based business which does not have the outage issues from roadworks, or extensive costs to integrate into existing infrastructure.
• No debt and good cash reserves at hand after latest round of capital raising (hopefully the last)
• Contracts are starting to be in place for up to 7 years, with the camera assets being depreciated over 5 years or 3 for fixed devices. Cameras can probably continue to operate long into the future after this date, and its more about whether the technology is still cutting edge and value adding. The longer cameras are operational the more NPAT they will contribute if assets have already been heavily depreciated and that's before any price increases for CPI are considered. Refer Link for extract below

Risks

• $4.50m of NSW revenue to drop off in Dec 2025 if they can’t secure a contract. Other contracts
• Other camera providers become further advanced and steal market share from Acusensus
• Lengthy legal battle over patent infringement
• Increased maintenance costs over time as cameras start to age
• NZ does not materialize to the full $90m value.
• Material or employee  shortages, supply chain issues or other delivery constraints (i.e governments bureaucracy) impact the ability to roll out new contracts in time with announced delivery dates.

Opportunities

• Increased revenue in some jurisdictions to switch on seatbelt enforcement solution without significant cost outputs
• Acusensus appear to be one of the leaders in the mobile point to point field (with a contract with WA) and will likely capitalize on this opportunity once AustRoads provide their guidance on MP2P solutions (and may put them in with a shot for the 3 P2P cameras in South Australia announced for 2025-26)
• I would be keen to understand the opportunity to recycle some of the trailer components in the future when rolling out new devices when Alex is interviewed on Strawman.

Acusensus and other camera providers deliver strong revenue generation for Jurisdictions, who have been accustomed (maybe even addicted) to the revenue they bring in and will have a huge budgetary hole to fill if they don’t extend contracts. From this reason alone, and the signal from TNSW’s contract extension (who typically try to only have 1-2 year contract/extension terms), I believe that contracts will continue to be extended to keep the gravy train running and extend the useful life of cameras to 7-10 years.

From my limited knowledge, the fleet of Owner Operator camera solutions continue to be in operation up to and well past their useful life for this reason. For example, South Australia went to market in 2022 (see SA tenders) to replace their ageing devices, however still have not announced a provider nearly 3 years later. The devices have continued to generate revenue even though they are past their useful life.

Valuation

If you strip out the staff and supplier costs for new builds and operations for the next 2-3 years (which are mainly front loaded for development), there will be contracts hopefully generating around $70-80m+ in revenue once NZ, SA, WA are all online. This isnt too far a stretch when you consider their latest update in the cap raise documents

After accounting for Research, OPEX, Plant and Equipment, Wages, IP, Leases, high depreciation and taxation, I am expecting NPAT to be at least in the $15-20m range. If Acusensus win more customers this will impact the 2027 NPAT but would provide better long term value. Taking this into consideration, my calculations are as follows:

2027 forecasted NPAT: $15-20m range

EPS: Approx. 11.8c per share

P/E: 12-15x to account for the growth opportunities and cyclical nature of procurement businesses

Est Price:  $1.45 to $1.8 (leaning more towards the upper range

I am leaning more towards the higher range given their track record of revenue growth over the past few years.

Disc: Held on SM and in RL.