2019: Seeing the rise of driver monitoring

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It’s now mainstream news that 2019 will be the year the world realises that driver monitoring systems are the next big thing in the world of auto. After all even Waymo CEO John Krafcik has acknowledged that widespread adoption of autonomous cars is some way away – hence its use of a Back-up Driver Monitor in its vehicles.

Seeing Machines is the leader in this space and it’s great to see some of its OEM customers, such as Byton, BMW, Mercedes at CES 2019. Others that have been developing DMS now realise they will have to choose SEE if they want the best camera-based DMS system.

Smarteye’s move to develop a chip must be seen both as a validation of Seeing Machines’ auto strategy but also as an indication that it is losing out to the Fovio chip in winning OEM business.

Auto revenues underestimated

It’s my contention that in the light of the incessant and pressing demand for its technology Seeing Machines auto revenues from 2020 onwards will be seen to be vastly underestimated.

Examining a detailed note from house broker Cenkos dated 22nd June 2018 is revealing. In it, (page 14) analyst John-Marc Bunce predicted auto revenues of A$63m in 2021, rising to A$213m by 2022.

I’d argue that global penetration of DMS as well as Seeing Machines market share of that penetration have been underestimated. That is already becoming clear to industry insiders and will become obvious to investors very soon.

What I believe will trigger it will be confirmation that Seeing Machines has cracked any of the following: another premium European OEM (Volvo or VW), a US OEM (Fiat Chrysler) and a Japanese OEM (Toyota, Honda, Subaru). I don’t think investors have too long to wait.

To be fair to Bunce he did acknowledge in the above note: “If Seeing Machines, as a similar market leader to MobileEye, manages to win 60% market share of the DMS market, and we assume global penetrating of DMS is 80% in 2026, this would imply the potential for over 50m vehicles pa (which compares to our current forecast of 27m).

It seems perfectly logical to me that a big beast will acquire Seeing Machines long before this becomes a reality — and not for peanuts either. Indeed, it’s strategic value cannot be overestimated and, even as I write, I wonder if discussions are taking place at CES that may eventually result in a takeover.

The writer holds stock in Seeing Machines.

One thought on “2019: Seeing the rise of driver monitoring

  1. I’m simply hoping there are no more negative announcements from the company. Last year the shoe dropped (twice) when they announced FY2019 would be similar to FY2018 due to component shortages etc. If the next piece of guidance suggests we just were delayed about a year on the way to A$80+ million, the stock should return into the double-digits (10 pence+). A positive update on the Fleet business would obviously help a lot too. New management hires hopefully earning their keep!? Regardless, they better not raise capital below this level, even if it is in conjunction with a listing/IPO on a more liquid exchange!

    Because if that analyst’s revenue estimates are even half-correct, we have a unicorn in the making. This has been my personal thesis all along (although taking longer)… especially given how much GM paid for Cruise (estimated around $1B US) – a company with arguably less potential and tons of heavy lifting remaining at the time.

    I dream of a “big beast” aquiring SM one day. What do you believe the company could fetch in such a deal, and who would the strategic buyers be? Which could afford to pay $1B+? Mobileye had positive EBITDA when Intel made its move (and paid almost 20x revenues!) I hope SM sells from a position of strength, which might take until 2020 or beyond?

    Interesting to note:
    1) CEO is only following Audi, Volkswagen and Ferrari in his LinkedIn profile among other non-OEM companies… so your idea about VW might be onto something…
    2) Veoneer at CES implicitly confirmed one of your earlier posts given its car on display… were there any other confirmations you could deduce? Lots of cars had HUDs that might one day utilize Fovio?

    Thanks for your updates as always.

    PS – I would appreciate your thoughts on SmartEye or any other likely competitors to Seeing Machines. The recent Reuters aeticle listed a handful of new “interior-facing camera” companies…
    PPS – any update on eservglobal? Because that HomeSend is very interesting…

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