Seeing Machines is worth US$10, even £10, but not 10p

At the Automated Vehicles Symposium (AVS) held in San Francisco last week, one presentation made was by the National Transportation Safety Board (NTSB), about the first Tesla crash involving Autopilot. The NTSB said that “steering wheel torque is a poor surrogate measure” for driver attention. In a tweet highlighting the presentation, Colin Barnden, Lead Analyst at Semicast Research commented: “This only really leaves camera-based DMS to fulfil driver engagement function.”. In a subsequent tweet Colin also identified a possible scenario where Waymo buys Seeing Machines, maybe even in a 12-18 month timeframe, for US$10 billion.

Here’s Colin’s reply in full to my asking about his thinking behind these tweets and the jaw dropping valuation.

Colin Barnden

The NTSB presentation at AVS. That’s a game changer. If you are a transport executive and you value your freedom, you don’t ignore NTSB recommendations. This even applies to anyone with the first name Elon too.

Level 3 is starting to gain traction so Waymo are looking like they have called the handover problem incorrectly and L3 is possible after all. Time will tell on this. L2/L3 is where the volume will be in my view, at least for the next decade.

Robo-taxis may get investor and press attention, but the volume will be in the mass market. Seeing Machines is the classic ‘pick and shovel’ play, the tech can go almost anywhere in transport applications that humans and machines interact. It certainly isn’t obsolete.

Price… who knows? Could be higher, depends how desperate the bidding war gets (see Sky as a good example). Remember what I wrote to you last week “I can see ten bucks a share persuading the Board to sell up soon, or even ten pounds, but not pennies. That would be stupid, and they (the Board of Directors) aren’t”. [This refers to us discussing privately the likelihood of Seeing Machines’ management accepting a low-ball bid in the next few months].

The current market cap simply reflects that the market is clueless to what SM has achieved. The company isn’t clueless, the executive management are whip smart. The market is coming to them (and Smart Eye too) it just needs patience. Maybe even as little as 12-18 months.”

You can follow Colin at @semicast_res

You can follow me, Chris Menon, at @Penforjustice

The author holds shares in Seeing Machines

Battle of the Titans?

In response to my latest blog post, Colin Barnden, Lead Analyst at Semicast Research, wrote to me explaining why he thinks Fovio is of strategic importance to both Apple and Alphabet. Indeed, his analysis reinforces my feeling that the two may soon battle it out to acquire Seeing Machines — regardless of any initial low-ball bid in the 25p-30p range from another party that kicks off a bidding war. 

I’ve reproduced his comments in full below so you get the benefit of his insights:

Colin Barnden

“Do you hear the thud? That’s the sound of the penny dropping in Silicon Valley that autonomous driving is not easy peasy after all. Witness no robo taxi development stories since March, after the Uber crash. As you report today, witness also the speed of conventional OEMs starting to adopt camera-based DMS. This is a technology which I have repeatedly been told by people at Silicon Valley based tech companies is “at best an interim solution and at worst already obsolete”. Elon might think something like that, but a steady stream of auto OEMs seem to want to work with Seeing Machines anyhow. My view is that every auto OEM will have announced their plans for camera-based DMS by the end of this year, with most implementing the technology for production from 2021 to 2023.

Apple have been trying to get into automotive for several years. Project Titan never really got off the ground, but CarPlay has been well received. For Alphabet, they have to hedge their position that Level 3 is redundant and have already moved to Level 4. There are many articles discussing this, here is one: https://www.wired.com/2017/01/human-problem-blocking-path-self-driving-cars/

I totally disagree with that view and Level 3 is very much possible, but it needs advanced DMS and sufficient human factors research to understand what humans do in the seconds and minutes following handing over driving to machine intelligence. Seeing Machines are underway with this work, led by Mike Lenné and the CAN Drive project. As Tesla have found – and Cadillac proven – you cannot even do Level 2 safely without camera DMS and the recent EC legislation calls for mandatory advanced distraction DMS (camera-based) even for Level 0. Other regions will follow in my view.

Both Apple and Alphabet need it, ideally so the other doesn’t have the technology. Whoever wins gets a minimum 3-5 year lead on the other (automotive qualification alone is 3 years – and Fovio is automotive qualified). Remember Zuck bought WhatsApp for $19 billion so Facebook had a potential rival under control. Conventional metrics for valuing a company won’t apply, this would be a straight Battle of the Titans. I’ll be watching.”

The writer holds stock in Seeing Machines.

A$50m Ford win for Seeing Machines

It’s great news that Seeing Machines, working with its Tier 1 partner Autoliv, has won a A$50m contract to supply its Fovio DMS system to Ford. Even better is that it’s on its new chip.

Once again my sources have been proven to be correct. Avid readers will note that in a previous blog, entitled: ‘Seeing Machines set to win 75% of the global DMS market’ the Ford win was predicted.

Back then, on 16th March, I wrote: “I’m being told that Fovio will soon be contracted to Ford, Volvo and Audi. (That’s in addition to General Motors, Mercedes and BMW). Moreover, those same sources are telling me that by the end of this calendar year Toyota will definitely be committed to using it and, most likely, Honda.”

The document containing this latest OEM win was published as part of Autoliv’s Investor Day presentation and is here: (Note that Veoneer is Autoliv’s active safety division that will soon be spun-off).

The clues are on page 13 and 17, in which it is revealed that in Q2 2018 Veoneer won a contract with a major global North American OEM for a DMS.

A spokesperson from Autoliv told Safestocks: “We cannot confirm the OEM name, but I can confirm that we will be working with our partner Seeing Machines for this contract.”

That the North American OEM is Ford is beyond argument. Seeing Machines already works with General Motors, Ford is also an important client of Autoliv. Moreover, when questioned Ford did not deny the contract win had taken place. A spokesman said: “Unfortunately, all I can tell you is that we do not discuss our contractual  arrangements with our suppliers.”

The writer holds shares in Seeing Machines.

Euro NCAP agrees camera-based DMS crucial to prevent driver distraction

Last week I spoke with Richard Schram, Technical Manager at Euro NCAP. For those backing camera-based DMS systems he provided a very positive update on the organisation’s plans.

He agreed that the problem of driver distraction could not be solved without cameras but he doesn’t think it is feasible to mandate that by 2021 (for 2020 the coffee cup DMS is what will be pushed for, as it’s easily achievable). By 2022 he expects EURO NCAP to be incentivising the introduction of AEB linked to camera-based DMS. Moreover, Schram agrees that: “by 2024 camera-based DMS will be part of most European passenger cars”.

Given the 3-year lead times for the introduction of technology into cars, it’s clear why the more safety-conscious car manufacturers are moving swiftly to integrate camera-based DMS systems into future car models.

I asked Colin Barnden, Lead Analyst at Semicast Research, to put Schram’s comments into context and he said that it “clearly confirms that Euro NCAP and the EU are in alignment”.

The he went on to explain how:

  • “Drowsiness and attention detection (DDR-DAD) – coffee cup : mandate introduction from 1 September 2021 to 1 September 2023. Euro NCAP 5 star rating starts with these systems in 2020.
  • Distraction detection (DRD-ADR) : mandate introduction from 1 September 2023 to 1 September 2025. The importance of the comment, “[in] 2024 camera-based DMS will be part of most European passenger cars” cannot be overstated and confirms my understanding that distraction detection systems will only be camera based. This will apply also to vans, coaches, buses and trucks – a total of between 20-25 million vehicles per year in my estimation (and that is just the EU28).”

Barnden added: “As previously mentioned the adoption rate for camera-based DMS will be dictated by the rollout plans of the OEMs and they are well ahead of the advisory bodies (Euro NCAP, Consumer Reports) and the legislative bodies (the EC, NHTSA) already. My attention has moved from Europe to where’s next.”

His opinion is that Japan is next. “FotoNation, Seeing Machines and Smarteye are all making a concerted effort there and that is a clear signal of OEM interest. Development of mobility services (eg Waymo) are much more advanced in the US.”

Personally, I’m expecting Seeing Machines to clinch OEM a big contract with Toyota in the next few months (then Honda), as first mentioned in my blog article: Seeing Machines set to win 75% of global DMS market. In that article I also forecast that further progress in the US is close at hand.

I think the evidence is clear that Seeing Machines is set to be the next Mobileye.

The writer holds shares in Seeing Machines.

Seeing Machines is next Mobileye

Yesterday’s news that the EU is to mandate Driver Monitoring Systems (DMS) by 2020 confirms my view that Seeing Machines is set to be the next Mobileye. (Something that respected FinnCap analyst Lorne Daniel first told us years ago).

People are waiting for Euro NCAP to specify that camera-based systems are its preferred option for DMS but I’m confident that this will be the case. (They’ve been ahead of the curve all along).

I’m particularly confident because Semicast’s Lead Analyst Colin Barnden recently explained to me that there are 4 types of DMS:

1. Steering angle sensor (coffee cup)

2. Embedded capacitive touch sensor (steering wheel)

3. Time-of-flight (likely DOA)

4. Camera-based (Seeing Machines, Smart Eye etc.)

This was his conclusion: “The first two are very cheap but not particularly reliable.  ToF fits in between and is unlikely to meet any OEMs needs. Camera-based is what I believe Euro NCAP will specify.”

Of course, the decision hasn’t been announced yet by Euro NCAP.

Market opportunity

While we await confirmation, there is also clearly a debate about the size of the market opportunity for Seeing Machines following the announcement.

At one extreme, ABI Research previously stated 65m by 2020.

At the other end, John-Marc Bunce, analyst at house broker Cenkos yesterday doubled his estimate saying: “Our long-term forecasts for Seeing Machines previously envisaged 4m vehicles globally in the financial year ended June 2022 rising to 15m by 2027 and we believe this EU mandate could easily double our expectations.”

Now Colin Barnden on May 16 (before the EU announcement) estimated 20m units by 2021. Today I asked him for his latest view. Here it is. (What follows below is all him, unedited by me).

“I await further details from Euro NCAP before changing the forecast, so a worldwide market for camera-based DMS of about 20 million units in 2021 still stands. That includes just passenger cars and light trucks, so there will be further volume in busses, coaches and heavy trucks too.

The broad effect of yesterday’s announcement is to move all of Europe to “Level 2” on the SAE automation taxonomy as of 1 September 2022, with both longitudinal and lateral correction provided by autonomous emergency braking (AEB) and lane keep assistance systems (LKAS). This is a step change in vehicle safety and the EC is to be applauded for its decisiveness. I expect the EC would have been influenced in its decision making by recent events in the US, with some members of the tech community moving too fast and breaking things, in their efforts to be first to deploy “Level 5” driverless vehicles. In comparison, the EC has gone for the simple and sensible approach of just making humans drivers into better drivers, by mandating systems which are proven, easy to understand and cost effective for immediate mass-market deployment.

Mobileye

I note your post about Mobileye earlier this week. If you were to take a market size of 20 million units for camera-based DMS and apply your other estimates, you would have a revenue for Seeing Machines just in automotive of about USD 375 million in 2021. If you compare that to Mobileye’s revenues of about USD 360 million for 2016 then some interesting conclusions can be drawn. If your reader’s are interested, the full Mobileye 20-F filed with the US SEC can be viewed at:

https://www.sec.gov/Archives/edgar/data/1607310/000157104917001997/t1700397_20f.htm

The part of the Seeing Machines business model which seems to me to be completely overlooked by the market is the recurring revenues provided by the Safety-as-a-Service (SaaS) component of the Guardian business unit.  It won’t take much for SM’s revenues and profits to pass those of Mobileye on a three-to-four year horizon in my opinion. Mobileye were of course bought by Intel in 2017 for USD 15.3 billion.”

EU mandates DMS for 2020

As part of a move to make European roads safer the EU today recommended making driver monitoring systems mandatory for new cars. It’s a momentous decision that is great news for Seeing Machines, causing its share price to shoot up today and Cenkos to upgrade its price target from 10p to 16p.

I asked Colin Barnden Lead Analyst at Semicast Research for his reaction and this is it:

Colin Barnden: So the paint is still wet from the announcements today, but I can draw some basic conclusions.

The EC has today announced the WHEN for a series of automotive systems to become mandatory, a list which includes distracted & drowsiness driver monitoring systems (DMS). My reading of the timeline is as follows:

  • 1 September 2020 for Type Approval (the certification process for new models, facelifts, major changes etc.).
  • 1 September 2022 for all other new cars, irrespective of Type Approval.

That is a two year phase-in period, and from today to the beginning of September 2022 gives a little over four years. That is a sensible timeframe over which to introduce a new technology like DMS.

The EC appears to have left the WHAT of a DMS to be defined by Euro NCAP and I expect the specifics of DMS requirements to follow in short order. This doesn’t guarantee that camera-based DMS will be mandated, nor specified by Euro NCAP. However looking at some of the other systems on the list (AEB, LKAS, ISA, EDR) these are all electronic systems so it would not follow that a mechanical (and very poor) DMS would be specified, even more so for a primary safety feature. Also the entire focus of this regulatory announcement is road safety. I regard AEB, ISA and LKAS as systems needed to compensate for distracted and drowsy drivers, so the obvious way to improve road safety is not so much to correct speed and steering errors, but to keep hands on the wheel, eyes on the road and minds on the task [of driving]. The very best DMS is the obvious way to do that and that points to a camera-based system, from the likes of Seeing Machines for example.

There are two excellent articles I would suggest as backgrounders for your readers for DMS:

http://www.thedrive.com/tech/20843/elon-musk-reportedly-rejected-driver-monitoring-for-tesla-autopilot-but-why

https://www.eetimes.com/document.asp?doc_id=1333236

If I were to also speculate on the WHERE; my view is that Japan will go next for mandatory DMS, probably followed by South Korea. Also, OEMs in the US are on a voluntary agreement (not mandated by NHTSA) to introduce AEB by 2022. I would speculate that they would be highly likely to add DMS on the same timeline.

The key is now what Euro NCAP announce.

Chris Menon: What exactly is the difference between ‘Type Approval’ cars and other new cars?

Colin Barnden: Okay. So, as an example, take the VW T-ROC. It was just launched and would have gone through Type Approval probably late last year. Type Approval is a bit like a new car MOT, someone looks over it and says: “Yes it has seat belts, yes, it has airbags, yes, it has brakes etc.” If it meets all the legislation in place at the time it gets… ‘Type Approval’. Provided no changes are made to the car it maintains Type Approval and no more need be done. Sometimes this can last for four or five years until the model is refreshed. However, from 1 September 2022, new T-ROCs would need to have DMS added, not for Type Approval (which it already has) but to be legal for sale.

Now take a next generation Golf going for Type Approval on 2 September 2020. The list will have another entry “yes, it has DMS” and you get Type Approval. If it doesn’t have DMS, it doesn’t get Type Approval and cannot be sold in the EU.

So on 1 September 2020, only cars going through Type Approval will have to have DMS (or a bit before most likely). By 1 September 2022, it will be in 100% of new cars sold in the EU. This is how the phase-in is managed.

Seeing Machines set to win 75% of global DMS market

Multiple industry sources are telling me that Seeing Machines’ Fovio technology is so advanced compared to rival systems that it is set to dominate the global auto market for DMS.

This market is growing fast and last year was estimated by ABI Research to be around 65m cars a year by 2020. Although I personally think this figure is now likely to prove an underestimate, given the fact that a driver monitoring system is becoming a standard feature in forthcoming car models. This trend is being driven (I love my puns) by increasing autonomy in cars, higher safety standards and legislation to reduce road deaths caused by driver inattention and drowsiness.

By my calculations, just using the 65m figure for 2020: Fovio will have at least 75% of that. As Seeing Machines (SEE) gets approximately US$25 for each car that uses its Fovio chip it should obtain annual revenues from autos of US$1.2bn.

How can I be so sure of this 75%+ figure?

Ford, Volvo and Audi

Admittedly, it is an estimate. But based on research.

I’m being told that Fovio will soon be contracted to Ford, Volvo and Audi. (That’s in addition to General Motors, Mercedes and BMW). Moreover, those same sources are telling me that by the end of this calendar year Toyota will definitely be committed to using it and, most likely, Honda.

Don’t expect absolute confirmation immediately. When they are eventually announced these contracts will be released as nameless wins, contracts for ‘premium’, ‘mass market’ country-specific OEMs. Seeing Machines will also have to be very conservative about the revenues forecast.

For those who know Seeing Machines as a perennial disappointment, a ‘jam-tomorrow’ stock, I urge them to look again at its growing dominance in the global automotive sector. This dominance in DMS now rivals that of Mobileye in external auto vision.

Fund Manager

If you don’t believe a dumb ‘ol journalist, maybe a super smart fund manager may make you look again at Seeing Machines?

Max Ward, Manager of The Independent Investment Trust, recently took a 4.46% stake in SEE. I wanted to know why and he kindly furnished me with the answer: “What attracted me to the business is the scale of the potential in the automotive division together with the evidence of clear market leadership in the DMS field.”

Previously, SEE successfully flew beneath the radar.  This was partly helped by its not having a PR agency in London, the harsh non-disclosure terms prevalent in the auto industry and the fact it was an AIM-listed minnow.

Fortunately, all that hasn’t prevented the global auto industry rushing to knock on its doors as increasing automation and safety concerns have led to tightening regulation, making its Fovio technology a vital ‘must have’ feature in future car models.

Now, at last, Seeing Machines is about to have the spotlight focused directly upon it. For dominance in global DMS makes it a very attractive strategic acquisition for big industry players.

Takeover time

Just as Mobileye was snapped up by Intel for US$15.3bn, Seeing Machines is likely to be bought fairly soon.

Indeed, I believe numerous companies now have Seeing Machines in their sights as a target this year. Who will pull the trigger first, I wonder? Names that have been mentioned to me recently include: Intel, Nvidia, Xilinx, Autoliv and Bosch.

Let the takeover battle begin.

The writer holds stock in Seeing Machines.

Seeing Machines compared to Mobileye

I recently asked Colin Barnden, Lead Analyst at Semicast Research for his views on Seeing Machines. I’ve reproduced my original questions and his reply in full, as his insights are worthy of a wider audience and deserve to be accurately reported.

Chris Menon: I’m very keen to find out what you think might be the likely valuation of Seeing Machines in the event of a takeover, if you’d care to speculate. Can it be likened to Mobileye in terms of its dominance of DMS? I’m also eager to know if you think there is much real competition? From what I hear Smarteye is a very distant second and its technology is in no way of comparable quality or reliability.

Colin Barnden: “I’m a market analyst not a financial analyst so the issues of valuation are out of my areas of expertise. That said, I don’t think there is a single financial analyst who could accurately value Seeing Machines (SM) as the company is active in so many markets and at so many points in the supply chain. SM also seem to be creating markets as they go along, which is highly cash intensive and has a long “time-to-money”. However get the strategy right and the rewards can be extraordinary. See Google, Facebook and Netflix as examples.

Mobileye is probably a good comparison to SM. Yes there is plenty of serious competition in DMS but what I see tends to happen in IP markets is that one company dominates and then everyone else is competing for what’s left. For example Mobileye has something like 65% of the automotive front camera market, with Xilinx the clear number 2. Which Tier 2 becomes number 1 for DMS depends largely on whether price or features matters most to OEMs.

I suspect it will be features…here is a document I have been reading that I believe pre-announces changes to vehicle legislation [for automotive] for the EU, to be made on May 16: https://www.governmenteuropa.eu/important-year-vehicle-safety-europe/84888/

My reading of it is that DMS becomes mandatory for all cars in Europe from 2020 and with a focus on both drowsy driving and distraction. That suggests camera-based DMS eye-gaze tracking for distraction and PERCLOS (PERcentage CLOSure) eyelid measurement for drowsiness. This is really complex to do well and not many Tier 2s can. The mention of an event data recorder also suggests a Tier 1 might go for a more complex DMS in order to save cost on the DMS/EDR combination. I also read into the announcement that alcohol impairment detection is likely to be a future feature for DMS.

I don’t cover trucks but the legislation there tends to front-run that for automotive by a few years. I really would not be surprised if DMS was made mandatory in Europe for all trucks and buses too, and to my knowledge SM is in a party of one for aftermarket fleet systems (with Guardian).

I’ll be watching on May 16  to see what the EU formally announces. If they mandate everything listed in that article, that would be a step change in road safety. In my view DMS will be the story of the 2020s, with autonomous driving not likely in any meaningful volume until the 2030s.”

Seeing Machines is worth £2bn

I know a few investors thought I was ramping when I wrote in a previous blog post ‘Seeing Machines wins BMW contract worth between US$125m to US$250m‘ that this AIM-listed minnow was worth £2bn (89p a share).

My reasoning is simple: it’s currently the leading specialist supplier in the global automotive market. (Read that slowly and ponder the implications as automotive is one of the hottest tech sectors in the world).

You want proof? Fovio, Seeing Machines’ world leading driver monitoring technology is currently being used by General Motors in its Super Cruise system for semi-autonomous cars, and is set to go into production in Mercedes and BMW cars within the next couple of years. 

Note that even before the BMW win, house broker Canaccord Genuity affirmed Seeing Machines was worth 21p in note dated 9th January. Analyst Caspar Trenchard also indicated that “the Fovio ‘platform’ technology might well be of specific additional worth to a corporate acquiror.”

Increased regulation is driving this adoption and many other car manufacturers and Tier 1s are queuing up to use Seeing Machines over the next year. I fully expect Subaru, VW, Audi and a host of others to follow in due course. (Tesla really ought to be banging on Seeing Machines’ door to get their kit into its cars.)

Lorne Daniel

Lorne Daniel, Head of Research at FinnCap, is a well respected tech analyst who has previously compared Seeing Machines to Mobileye, which was bought by Intel for US$15.3bn. 

I needed a sanity check to ensure I wasn’t deluding myself as to its intrinsic value, so I asked Lorne Daniel a simple question: “Do you think a £2bn valuation on Seeing Machines is unrealistic, given its increasing dominance in the auto OEM market?”

His reply: “Absolutely it’s a realistic valuation. The end markets are enormous and time and again the company is delivering on its promise with very big companies.”

Of course, I can imagine many readers moaning, “But its price is less than 5p!”

Well, as Warren Buffet once famously said: “Price is what you pay, value is what you get.”

Low-ball bid

Given the fact the stock is currently languishing below 5p, my own concern is that there is a distinct possibility an opportunistic bidder may soon seek to take advantage of this valuation anomaly with a low-ball bid.

Should that event materialise, my hope is that the management and quality institutional investors, such as Herald’s Katie Potts and Miton’s Gervais Williams (who’ve been invested here for years and fully realise what it is now worth), would resist any such offer and seek a price that fully reflects its value.

After all, the likes of Apple, Google, Samsung and Tesla — not to mention a host of Tier 1 automotive suppliers (Autoliv, Bosch, Aptiv, Denso and Continental etc)— are likely to be keen to acquire Seeing Machines’ technology. 

Think about it. £2bn is a realistic valuation for Seeing Machines. Moreover, £2bn for some of these companies is money that they can easily afford to spend in order to build market share in the automotive market.

The writer holds stock in Seeing Machines.

Seeing Machines delivering on long-term strategy

In an exclusive interview with Seeing Machines interim Chief Executive Ken Kroeger, he has confirmed that the company remains on track to hit its first half financial targets and is making no adjustments to its full year figures.

Following the departure of former chief executive Mike McAuliffe, who had only been in place a few months, private investors have been concerned as to whether there was likely to be any strategic change of direction. Happily, as Ken Kroeger confirmed: “The strategy that we’re executing is exactly the same one that we were executing when he arrived. Moreover, the executive team that is delivering that strategy remains the same.”

It’s a point that was well made by Lorne Daniel, analyst at house broker FinnCap a week ago, when he wrote: “We know that the second tier of management in this business is particularly strong and will continue to follow the strategy and deliver on the milestones as expected.”

The business certainly seems to be making steady progress across fleet, auto and aviation and Kroeger stressed the efforts of the executive team in having built them up. “These are businesses that didn’t even exist a few year ago and Paul Angelatos (Fleet), Nick Di Fiore (automotive) and Pat Nolan (Aviation) have done a great job in creating and building these markets for Seeing Machines.”

Auto industry

Not only is Seeing Machines working with GM to deliver driver monitoring systems for its cars (most notably the Cadillac CT6 whose Supercruise system uses it), but on October 30, 2017 its Fovio Driver Monitoring System was chosen by a premium German OEM (who I believe to be Mercedes).

Kroeger wouldn’t comment on who the German OEM is but did confirm: “It is extensively pushing the boundaries in driver monitoring, taking it to a whole new level. That is underway. That is a real state of the art delivery, very technically challenging but it sets a completely new performance standard for DMS.”

Given recent bulletin board discussions as to the respective merits of Seeing Machines technology vs. SmartEye, Kroeger was happy to explain: “We have the best technology, there is no doubt about that at all. SmartEye has an okay technology, which is cheaper…we’re much better positioned to take the premium car models that are interested in performance, who need this to work because it is a safety critical feature. For models that are being rolled out where it is nice to have comfort features in the car, which only require rudimentary head and eye-tracking, SmartEye is a viable option.

He added: “Right now we definitely have a leadership position from a technical perspective. That is very much respected by the auto OEMs.”

In addition, I’m optimistic that other OEMs will select Seeing Machines DMS technology, doubtless driven by the NCAP requirement for any car model wishing to have a 5 star safety rating from 2020 to have a DMS in place.

In Japan strong market opportunities are being helped by the effort of Kevin Tanaka working out of the West Coast in the US. Also Kroeger confirmed: “There is a very strong alignment with Xilinx in Japan, who are doing a lot of our on the ground marketing for us. It is definitely getting well received by the Japanese.”

Fleet

While a comprehensive Fleet update is due this week that should provide much awaited news on further wins, Kroeger did reveal that the Guardian 2.0 device will start shipping by the end of March. The upgraded system is significantly cheaper to manufacture, smaller and easier to install, which should also help increase penetration rates.

Takeover

Given the much higher profile of Seeing Machines since the launch of the Cadillac CT6 and the most recent CES show, where it was showcased by both Bosch and Autoliv speculation is increasing daily over whether it is being tracked for takeover, whether by a Tier 1, a telematics company, or even Google or Apple.

Asked about this Kroeger coyly replied: “There is always interest. We would never say ‘no’ to a conversation but we also recognise that there will a time when the time is right to return the best value to shareholders. We’re very cautious about the conversations we do have and, if we were to contemplate selling the company, we would have to find somebody who valued the entire organisation to obtain the full value for it.”

When pressed further about Google, Apple or Amazon seeing the long term value in Seeing Machines technology, which has applications far beyond transport alone, given it can enable robots to see and perhaps eventually even empathise with humans, Ken Kroeger commented: “I agree it is either someone like that who can see the full value or a really diverse Tier 2 or Tier 1, as opposed to the OEM. The Tier 1s sell to the OEMs but some of the Tier 2s which sell to the Tier 1s are exceptionally diverse. They might be building stuff for automotive, stuff for aviation and stuff for medical devices, stuff for consumer electronics. They might not just be an automotive-centric supplier. They are really hard to find and pinpoint but they are out there because they are always talking to us.

Of the partners that Seeing Machines currently has some are definite possibles. “Or, it could be someone who sells image processors and wants to start packaging it with software already on it on a smart camera or smart sensor,” teased Kroeger.

Despite being a world leader in DMS tech, a key plank in the forthcoming generation of semi-autonomous cars and increasingly being considered in trains, planes, trams and buses, it’s current share price languishes at approximately 5.5p. This valuation anomaly cannot last much longer, especially as with the recent fundraise it has been largely de-risked as an investment provided sales continues.

Ironically, such a deeply discounted valuation could well be the catalyst for an opportunistic bid from a cash-rich global player before the year end.

The writer holds stock in Seeing Machines.