Noting that Spectur is doing the rounds through some brokerage company at the moment. I haven't had a chance to take one of the calls but voicemail indicates there may some sort of cap raise on offer.
I’ve pondered this for a little while. Micro/nano cap companies and taking the approach of putting in $50k - $100k at a price less than 1x sales (or 1x profits even, lol why not) and curious if that would ever be a big enough stake to take a board seat and influence the company to head in a direction that could benefit shareholders.
That is assuming the skills, knowledge and patience to do so. It’s not all about money.
Kind of like coming in as microscopic private equity. Buying a chunk of the business then helping scale so I end up with a $2bil dividend like twiggy at FMG.
Spectur could be small enough.
Thoughts?
Out of interest, I was camping in Kakadu in the NT the other week and noticed a couple of Spectur units on remote roads. I think someone here had a knock on the aesthetics of the units. I can you that they look pretty much just like a small light pole. Quite discreet. I just noticed the sticker on the unit with the company logo on it otherwise I would’ve driven right past without noticing the thing at all. Maybe the close up photos on the website makes them look strange but in reality they’re quite nonchalant.
@Elpaso
Great content with the valuation, it's good to see you posting regularly again!!
I have a few queries
"if I don't see it prop up in the financials then I will not consider it."
Let's hypothesize and say prop up in financials = generate sustained free cash flows for a few consectuve quarters.
Do you think that by the time the business is propped by its financials that it will be revalued by the market and thus you will miss some of the upside? (I personally don't own Spectur for similar reasons but I am interested to hear your thoughts).
"The driver of the valuation is revenue growth as the company since I am only considering the hardware sales (not rental revenues etc...)"
I dont necessarily disagree with this statement, but don't fully agree either.
Yes, high levels of revenue growth would be good for the business but would this necessarily drive the valuation? What if revenues grew but costs grew at 2x the speed? Would the valuation still rise? And you really need to consider the cash position of the business. They aren't capitalised well enough to grow at such a speed.
& how come you are only considering the hardware sales? Back in January 2021, Gerard stated the following;
“Spectur achieved quarterly revenue of $1m, reflecting a shift in market sentiments from outright ownership to short and longer term rental and leasing models. These longer term contracts underpin future revenue and will lead to greater stability and predictability in revenues going forward. Gross margins for the rental fleet are also consistently greater than 70%, which should also contribute to improving profitability as volumes continue to increase.”
Gerard 'sold' the capital raise as a launch for the rental fleet and the software development for the business. Subsequently in the interview here he mentioned that SP3's long term plan was to develop into a platform business rather than a seller of hardware.
I think you need to reconsider the software side of the business given it has better margins, has less capital intensity and IMO has the potential to generate more pure free cash flows than the hardware side of the business.
Thank you immensly for the valuation post, If anyone is interested in me revisiting my valuation(s) for Spectur then please reach out and I will create some further notes for the community.