Don’t despair with SEE: do more research

Posted on 19th December 2023 by Admin

I must admit to having been a bit distracted by the ongoing genocide in Gaza over the past couple of months. Still, I felt it important to provide my views on the recent Kr1.55bn (US$150m) Smart Eye contract, as I know a lot of investors are rightly concerned by lack of news flow on the automotive front from Seeing Machines (AIM: SEE) – aside from a relatively small (US$15m) contract win in early November.

I do think the recent Smart Eye contract is with General Motors, as that has been the conclusion of 3 sources better placed than me to know about it (Colin Barnden, the RedEye analyst and my private source). Am I particularly concerned? Quite frankly, no. My guess is that, and it is only my guess, the contract is dual sourcing at bargain basement levels. As to the size of the contract, well SmartEye normally pump out the biggest figure they can so the lifetime value given is likely an absolute maximum.

Still, it is big positive for SEYE and I wish them well. The market is big enough for both SEE and SEYE and things are clearly hotting up in this space.

As to SmartEye, being a Tier 1? Well, I think that is wishful thinking. Possibly a case of necessity being considered a virtue. For I still maintain my thesis that SEE takes 75% of the auto market with the Magna mirror and Valeo.

Positives for SEE

If there is a positive for Seeing Machines, it’s that the logjam regarding larger auto contracts appears to be over. Moreover, the SEYE contract starts in 2027 so I think SEE via the Magna mirror has won a lot of contracts that will start before then.

That said, if we don’t get a big auto contract by the end of this quarter it’s definitely a disappointment. It’s particularly so given the fact that the strong likelihood of multiple contracts this quarter was flagged by both CEO Paul McGlone and his CFO, Martin Ive, in various interviews.

Still, I do believe they are honest and have been let down by OEM shenanigans re. The announcement of further contracts. My hope is that CES will deliver the news we’ve been waiting for re. Auto, with great news coming for Aftermarket with the launch of Gen 3 Guardian.

Indeed, I’ve been impressed by Ive since he joined (and not just because he looks like my younger brother). I also hear that he is cutting expenditure, as promised, to ensure SEE reaches breakeven as promised.

More effective communication

In the absence of said contract news, I’d like to see more timely and effective communication to stem the concerns of private investors. They (unlike fund managers) can’t just ring up the CEO to check on their investments. Moreover, for a private investor their investment often represents a huge proportion of their investment portfolio, not a mere 5 per cent maximum as in most funds.

I ask for this because I fear that many private investors are currently selling down their holdings because of a lack of reassurance from the company. Times for many are tough and I’d hate for private investors to miss out on what I increasingly believe will be rich rewards.

Please don’t take my word for any of this, it’s just my humble opinion and I’ve been wrong on details in the past. That said, being too early into an investment isn’t the same as being wrong. Indeed, I maintain that my original investment thesis remains intact, which is why I still hold this stock. In any case, do your own research as it will benefit you in the long run.

The writer holds stock in Seeing Machines.

6 reasons why SEE gets bought in 2024

Posted on 4th October 2023 by Admin

I’m convinced that next year is set to be the year that Seeing Machines finally gets bought.

Here’s why:

In the next few months Seeing Machines will prove to even the most sceptical observer that its DMS/OMS land grab has been successful, with it taking over 75% of the global market by value. The partnerships it has formed with the likes of Qualcomm, Magna, Valeo, etc. are unrivalled and its tech and implementation are clearly a cut above any other provider.
The launch of the third generation of its Guardian product for trucks and buses will see that business slash box costs and times for installation, enabling it to go ten times on that business in short order. Mobileye marketing it for Aftermarket should be a game changer.
Aviation will have been proved as a lucrative business that has legs, thanks to its partnership with Collins and the first of many huge, long-term contracts.
It is also clear that its technology has applications in other transport verticals, marine, and rail for instance, not to mention other industries such as robotics, entertainment, and security.
Profitability will become a certainty with the above contracts, leading to more funds investing and the price rising substantially, making it more attractive and fuelling the greed of a potential buyer.
There are just too many huge companies who now have a direct interest in acquiring this market leader, not to mention a huge amount of Private Equity capital available to fund a takeover. Moreover, if it were to go for $5bn, they could be fairly confident of it rising in value to $15bn-£20bn within a three-year horizon.

While the bulk of investors (including fund managers) are only now beginning to understand the strengths and potential of Seeing Machines, that can’t be said of the industry players, the chip companies and Tier 1s, who regularly work with Seeing Machines or come across its technology. Moreover, the likes of Alphabet, Amazon, and Apple know Seeing Machines and must like what they see.

Great business

A much smarter man than me, an investor, business manager, and experienced entrepreneur who has sold businesses, once told me: “Great businesses get bought NOT sold”.

While some may hanker after a Nasdaq listing, I think market conditions over the next year and beyond will mitigate against this and leave an opportunity for a competitive bidding situation to arise.

I don’t know when exactly this will happen nor who will win but a bid is coming, of that I’m fairly certain. After all, Bosch was interested 5 years ago and Seeing Machines’ business is incomparably stronger now. Moreover, the dream of widespread adoption of autonomous vehicles has been shown to be just that, a dream that will take decades to be realised. Thus leaving the field to those who want to make driven cars safer.

Great value

In view of all the above, there is just too much value here at a sickeningly cheap price. (I’d be saying that even if the price was 35p, not 5p). The market abhors cheap value, as much as nature abhors a vacuum.

The writer holds stock in Seeing Machines.

Seeing Machines revenues beat broker forecasts

Posted on 22nd August 2023 by Admin

Seeing Machines trading for the FY2023 ending 30 June, was US$57.8m, beating all broker estimates. Moreover, it points to the current financial year being a transformational one for the AI-powered, vision-tech safety company.

Indeed, my model’s prediction of revenues at $60m would have been hit had the US$3m contribution from Collins Aerospace been included. Never mind, as the money was actually received in August, it will go into the 2024 figures.

All three divisions (Auto, Aftermarket and Aviation) are doing very well and will see growth increase over the next year.

AUTO. There are now over 1m cars on the road with Seeing Machines DMS in them, an increase of 143% over the past year. Moreover, the numbers will accelerate as more vehicles with its tech are launched to meet the requirements of the EU’s General Safety Regulation, which comes into effect in July 2024. I still believe it will achieve a 75 per cent share by value of this global market – although, hitherto the company itself has only confirmed 40 per cent by volume and 50 per cent by value.

AFTERMARKET. The Guardian business had almost 52,000 heavy vehicles connected, with record sales (10,000 plus) in the fourth quarter. That represents an annual growth rate of 30 per cent but I expect a huge increase this year with the launch of its third generation offering, at a higher profit margin.

AVIATION. This is starting to deliver revenues following its exclusive license deal with Collins Aerospace. Aside from license revenue of $10m over 3 years, it will also receive non-recurring revenue payments to develop specific solutions, which will in turn evolve into potential future royalty payments as products are shipped to customers.

I can only agree with the comments from analyst Damindu Jayaweera at Peel Hunt who, in a note published today, concludes:

“Since initiating coverage, the company has delivered positive surprises in the form of a large aviation contract with Collins Aerospace, and this FY23E beat. With the support of the Magna contract, we see a cash runway well into FCF generation. Despite all this, the shares are back to 2018-20 levels, when it looked as if the company would run out of its cash runway. We believe this dislocation is an opportunity that investors should exploit, following in the footsteps of all the insider buying we flagged in our initiation. We reiterate our Buy rating and 12p TP.”

In my humble opinion, Seeing Machines represents that rare combination of a value play that is set for stellar growth. However, do your own research.

The writer holds stock in Seeing Machines.

Seeing Machines rises in expectation of positive trading update

Posted on 4th August 2023 by Admin

The price of Seeing Machines is rising in expectation of it beating consensus forecasts for the 2023 full year to 30th June, when it provides its trading update on 22nd August.

To refresh your memories, here are most of the broker forecasts for Seeing Machines FY2023. Unfortunately, I’m missing that of its house broker, Stifel.

Brokers	2023 revenues (US$)	2023 adjusted pre-tax loss
Cenkos	53.5m	15.2m
Panmure	56.7m	13.2m
Berenberg	54.1m	16.8m
Peel Hunt	53.8m	17.1m
Stifel
Safestocks	60m	11m

I’m confidently predicting that Seeing Machines will beat these estimates and have pencilled in revenues of around US$60m for 2023. I’m not even going to provide 2024 estimates as I expect all the brokers to upgrade soon. Indeed, even their initial upgrades won’t factor in likely progress over the course of the 2024 financial year.

There is also a frisson of excitement around the launch of its Gen 3 Guardian Aftermarket product. I expect to learn the date for the launch of its Gen 3 product for trucks on 22nd August. I’m hoping it is before the end of September and is announced with at least one sizeable contract — it must have been going through its paces with existing Fleet customers.

Auto and Aviation appear to be progressing well and further positive updates could well drive the price to all-time highs by this Christmas.

EBITDA breakeven

Furthermore, I’m expecting confirmation of further news in the coming months that should send the share price into overdrive as EBITDA breakeven is brought forward. Breakeven at the EBITDA level isn’t more than 12-18 months away based on the current trajectory. Still, I expect sales to accelerate from here to such an extent that I believe there is a likelihood that we hit EBITDA breakeven by the end of the current financial year. Should brokers publicly confirm this the share price will go gangbusters.

My confidence in the near term is also strengthened by a comment from the analyst now covering Seeing Machines at Berenberg. In a note dated 21 July, 2023 Robert Chantry stated: “We also expect the company, in the medium term, to leverage its significant knowledge pool and expertise to develop new products and adjacent technologies, particularly once it has achieved breakeven at EBITDA. This might include other types of transport, as well as revenue streams relating to marketing.”

Given that Seeing Machines always plans years ahead you can be pretty confident that what Chantry opined isn’t mere conjecture.

Here are my thoughts:

Transport. I believe that in the past Seeing Machines has undertaken some marine trials of its technology and we know it has been used in trains. The fast-growing eVTOL market seems ripe for such tech plus there is all manner of machinery, from tractors to cranes that could perhaps do with it. It surely is a no-brainer that SEE’s tech get’s licensed to Tier 1s in other transport sectors now that it has Auto, Aftermarket (Fleet) and Aviation sewn up.

Marketing. Eye-tracking has been used by competitors to assess the efficacy of marketing, for instance Tobii. As Tobii has entered the DMS space (albeit with no sign of success), it seems only fair that Seeing Machines returns the favour.

Tesla

Strangely enough, I received a press release this week from CMC Markets that mentions that Tesla is the UK’s most googled S&P500 stock, with an average of 260,180 Google searches a month. In my books that is probably a sign to sell the stock. In a saner world, those people would instead be googling Seeing Machines.

An additional irony is that Tesla really ought to be putting Seeing Machines Driver Monitoring into its vehicles. It would stop ‘bad Ted driving’ and save lives.

The writer holds stock in Seeing Machines.

Reader’s Digest article on Driver Monitoring

Posted on 17th July 2023 by Admin

Reader’s Digest has just published my latest article on driver monitoring. It contains some interesting insights from Thatcham Research and Seeing Machines. I hope you enjoy it.

Please do try and test drive vehicles with this technology and tell people about them.

Seeing Machines DMS ensures Ford BlueCruise is super safe

Posted on 9th July 2023 by Admin

Last week I was privileged to be invited to test drive the 2023 Ford Mustang Mach-E, whose BlueCruise hands-off driving system uses Seeing Machines’ Driver Monitoring.

I’m no motoring journalist but I have to admit the Mach-E delivered a very impressive experience using its ‘hands-off, eyes on’ assisted driving. Fortunately, I was in the company of Robert Llewellyn of Fully Charged Show fame. Aside from being good company, he’s very knowledgeable about electric cars and absolutely loved Mach-E SuperCruise, as I’m sure he’ll soon reveal in one of his videos.

This is from the presentation Ford supplied on the day:

BlueCruise builds on the capabilities of Ford’s Intelligent Adaptive Cruise Control, which can automatically keep pace with traffic within legal speed limits, right down to a complete halt.
Hands-free mode allows drivers to drive with their hands off the steering wheel on approved Blue Zone sections of motorway, so long as they continue to keep their eyes on the road ahead – granting an additional level of comfort during long drives.
Before transitioning to hands-free driving, BlueCruise-equipped vehicles confirm that lane markings are visible, that the driver has their eyes on the road and that other conditions are appropriate.
The system uses animated cluster transitions featuring text and blue lighting cues to communicate that the feature is in hands-free mode, effective even for those with colour blindness.

Ford is rightly proud of the vehicle and its safety record. Indeed, the company boasts that during the 2 years BlueCruise has been available in the US its 200,000 users have covered 100m miles without incident.

What Ford isn’t shouting about is that it is Seeing Machines DMS that is the reason there haven’t been any incidents, as it ensures the driver’s eyes are on the road before, during and after BlueCruise is engaged.

Tactical move widens Seeing Machines’ moat

Posted on 21st June 2023 by Admin

I think the Devant collaboration announced on the 20th June is a tactical move to widen Seeing Machines’ (AIM: SEE) moat. The data derived from real-life driver experience, known as its ‘river of gold’ has hitherto protected its AI-fuelled technological lead. Now it will be augmented by a sea of computer-generated edge cases from Devant, a specialist in synthetic data generation who is focused on the niche area of in-cabin monitoring.

This should help Seeing Machines speed up the development of DMS and future in-cabin monitoring applications that are being demanded by the industry and regulators, putting Seeing Machines even further ahead of its competitors.

Far from an admission of weakness, this move demonstrates that Seeing Machines is doing all it can to maintain its leadership position — without breaking the bank. I don’t envisage any competitor overtaking SEE within the next 3 years. Indeed, part of me wonders if we might not end up acquiring Smart Eye or Cipia eventually. However, I’m betting Seeing Machines gets acquired within 2 years.

Auto RFQ delays

I appreciate the lack of auto OEM contract wins being announced has rattled many of us. I think it is entirely down to OEMs waiting until the last possible moment to decide how sophisticated a DMS/OMS to use, in the light of tighter EuroNCAP regulations that are coming into force in 2026 but which still haven’t been totally tied down.

This has been confirmed to me following conversations with people at EuroNCAP — sadly, I find myself curiously unable to obtain basic information from official SEE channels following scoops that have upset some people. (But, like a would-be lover suffering from unrequited love, I am still fully invested in this brilliant company).

Q&A Euro NCAP

Here’s a brief Q&A with Euro NCAP:

I understand that the EuroNCAP 2025 protocols aren’t yet out. Can you tell me:

Q. When do you expect them to be published?

A. 2026.

Q. What exactly is the process for their iteration and publication? Is a draft put around to the industry players for comment? If so, at what stage are they currently?

A. Currently under development, discussing the new requirements and test provisions alongside industry.

Q. Have they been delayed, if so why?

A. Initially considered for 2025, we finally decided to switch to a 3-year cycle, so starting their implementation from 2026. This was to allow sufficient development timing for protocol development and giving industry sufficient headroom for technology adoption.

Q. What provisions regarding driver monitoring are they likely to include and how advanced are they likely to be? (I know there is a roadmap but I’m not sure about the precise details of it and how it applies to driver monitoring).

Driving under influence (2026)
Optimised passive restraint systems based on occupant posture and/or size (2026)
Increased requirements for the precision of determination on non-reversible driver states e.g., drowsiness, unresponsive driver / sudden sickness (2026)
Specific provisions for Assisted and automated driving (2026)
Link of driver state to the way ADAS functions are tested and assessed e.g., FCW/LDW sensitivity (2026)
Cognitive distraction / mind wandering (2029/2032)

The writer holds stock in SEE.

Forever chemicals in UK drinking water

Posted on 4th June 2023 by Admin

Despite a reluctance on the part of water companies and the government to admit the risks posed to the population, irrefutable proof now exists that our tap water contains unacceptably high levels of toxic ‘forever chemicals’.

I researched and wrote this article, Revealed: Toxic ‘forever chemicals found in tap water near airports, which Open Democracy was prepared to publish. I hope the instances investigated in this article will spark public debate.

They are only a fraction of the many examples that will eventually come to light as more journalists are able to spend the time to investigate further.

We need far more disclosure from water companies and the government to take immediate action to clean up our drinking water, which is going to cost many billions of pounds. Personally, I believe the water companies and polluters, not the general public, should pay for the costs of this.

We need far tighter regulation of PFAS chemicals and industrial pollution in general, which have contributed to a hidden public health emergency.

Sadly, PFAS chemicals have the greatest impact on children. Thus, for the very future of this country, we can no longer ignore this problem.

The scientists quoted in the article really deserve great admiration and support for their tireless work in bringing these issues out into the open.

Dr Julie Schneider

Dr Roger Klein

Professor Philippe Grandjean

I hope you also appreciate and support public interest journalism.

Play your part

If you want to find out the extent to which toxic PFAS chemicals are in your tap water, and what your water company is doing about it, I suggest you make a formal Environmental Information Request to your local water company.

You could then contact your local paper and environmental groups to help disseminate this knowledge. Working together we can make a difference and contribute to the change we want to happen.

When should you sell a share?

Posted on 30th May 2023 by Admin

Buying a share is easy, perhaps too easy, but when should you sell a share?

Well, renowned investor Philip Fisher explained all about this in his book Common Stocks and Uncommon Profits. His focus on the qualitative aspects of value investing was a big influence on Warren Buffett and this book deserves a place on the bookshelf of every investor.

I’ve recently written an article for Reader’s Digest that explains when you should sell a share, drawing on the ageless wisdom of Philip Fisher. Enjoy!

Seeing Machines announces US$10m license deal with Collins Aerospace

Posted on 19th May 2023 by Admin

Seeing Machines has announced its much anticipated Aviation license deal with Collins Aerospace, the world’s largest Tier 1 avionics company – as predicted here back in February.

The “exclusive” and “perpetual” license deal provides a license payment of US$10m ($3m immediately and the $7m balance over the following 2 years). Collins will also pay Seeing Machines non-recurring engineering (NRE) payments to develop the solutions, evolving into potential future royalty payments as products are released to customers.

Although details as to what exactly is covered under the license were missing in the RNS, I’m hoping to eventually get some answers to those questions from the company. Or, maybe, we’ll be treated to a video of Pat Nolan taking a bow in conversation with Paul McGlone. (Certainly, both deserve a round of applause for this deal!).

Muted response

What has really surprised me is the muted response from brokers covering the stock. None issued an upgrade, although they were all positive on the stock. Unbelievably, at the end of a huge week, the price has barely risen in response.

I have a sneaking suspicion that the 333-plane deal mentioned in the infamous ‘Italian Job’ video will materialise fairly soon. My guess is that some analysts are keeping their powder dry for that announcement. In the meantime, I can imagine paper-thin ‘Chinese walls’ mean some salespeople are telling their very special institutional clients to: “Buy, buy, buy”.

The writer holds stock in Seeing Machines.