Tag Archives: Magna

Seeing Machines confirms Tier 1s licensing its tech for trucks

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Confirmation that Seeing Machines is partnering with Tier 1 suppliers to scale deployment of its driver-monitoring technology into trucks emerged from an interview with CEO Paul McGlone this week.

The latest Guardian Gen 3 sales figures contained in the Q3 KPIs were disappointing at first glance. Although annual recurring revenues and margins increased, only 1,610 hardware units were sold between January and March. The long-discussed target of 6,000 Guardian sales has yet to be reached, although comments made in the same interview suggest Q4 figures could improve materially.

More significant, however, was the indication that Seeing Machines will increasingly license its technology through Tier 1 suppliers selling into the truck market. This represents a major opportunity. Approximately 600,000 medium and heavy trucks are manufactured in Europe annually, and regulatory demand for driver monitoring is increasing rapidly.

With partners including Valeo, Magna International and Mitsubishi Electric, Seeing Machines appears increasingly well positioned to replicate in commercial vehicles the progress it has already made in passenger cars.

The company may have to sacrifice some recurring monitoring revenues where its software is bundled within a Tier 1 ADAS stack. However, the potential increase in deployment volumes could more than offset that trade-off.

Evidence that this strategy is gaining traction may already exist. Valeo recently announced that its Smart Safety 360 ADAS platform — which incorporates driver monitoring functionality — had been selected for deployment with an Indian truck OEM. This raises the obvious question of whether further announcements involving Seeing Machines are now approaching.

I remain confident that progress is being made in both Europe and the US, and expect additional commercial updates over coming weeks and months.

I am also watching closely for news relating to the large Japanese contract recently referenced on LinkedIn, although the identity of the customer has not been officially confirmed.

Further contract wins should strengthen the case for broker upgrades to valuation targets.

In addition, sentiment should continue to improve as investors become increasingly confident that Seeing Machines is:

  • Cash generative
  • Able to repay the Magna facility through its new debt arrangements, which are expected to be finalised in June.

The recent $3.8m follow-up order from Waymo for BdMS hardware also underlines the strength of the company’s technology and its standing within advanced autonomy programmes.

The writer holds stock in Seeing Machines.

Stifel reiterates ‘Buy’ with 9.6p price target

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Following on from the news that VW has started production in China, with Seeing Machines DMS and OMS tech in Magna’s rearview mirror, Stifel has reiterated its 9.6p price target and confirms SEE as one of its top picks.

In a flash note issued today, Stifel analyst Peter McNally wrote:

“The significance to us is that production is happening on time. As we heard at the Townhall event earlier this year, Seeing Machines was expecting the start of production of a number of programmes this year with one significant one over the summer (which we believe happened on time) and a second larger one later in the year. So, the announcement is good news that it is starting toward the early part of calendar Q4.

“We also note that this is for both DMS and OMS which typically indicates better ASP than DMS alone. We see this as a positive development as the company approaches its target of run-rate cash flow break-even by the end of the year.

“We don’t think this announcement has anything to do with the Magna loan but is purely signaling that the production ramp is starting on time. We should be getting fiscal Q2 KPIs in the next couple of weeks. The company remains one of our top picks at 14.4x FY26E EV/EBITDA. Buy.”

It should be remembered that current broker estimates don’t include estimates for revenue from sales in China, so I’m expecting broker upgrades in due course.

The writer holds stock in Seeing Machines.

Magna confirms Seeing Machines mirror winning OEMs

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In its Q3 earning update on 31 October Magna confirmed that its DMS/OMS rearview mirror with Seeing Machines technology is being launched into additional car manufacturers aside from Volkwswagen.

The Magna CEO Seetarama Kotagiri stated in his investor overview last Friday that “
in advanced safety, our mirror integrated driver and occupant monitoring system is meeting growing global demand for DMS technologies.

As you may recall, this product earned a 2024 Automotive News PACE Award for its innovation and safety impact. We are launching this system with multiple customers worldwide and volumes are expected to reach several million units annually.”

This is encouraging news as we await the latest set of KPIs from Seeing Machines this week. I expect them to confirm its lead in automotive and growing traction in sales of Guardian Gen 3, while we wait for some huge contracts in the latter. 

Indeed, while Smart Eye has only now hit 3m cars on the road with its tech, Seeing Machines is set to speed past 4m, on the way to 5m by the end of the year.

Toyota 

The news last week of progress in Japan, with an OEM that I believe is Toyota, failed to make much impact on the share price. I found that surprising as the engineering work on this cutting edge interior monitoring system (featuring both DMS and OMS) will generate not insignificant revenues, industry estimates vary from $4-5m.

Of course, much more significant is the near certainty that this Advanced Development Project will lead to a very large contract from this OEM in the first half of 2026.

That contract alone will increase the price any acquirer will eventually have to pay for Seeing Machines.

The writer holds stock in Seeing Machines.

Seeing Machines focused on cashflow breakeven in CY 2025

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It’s clear from the latest spate of redundancies that Seeing Machines management is laser focused on achieving breakeven this calendar year.

In addition to cutting staff numbers by 77 in CY2024, the recently announced strategic reorganisation was accompanied by another wave of redundancies (70 people?) from Jan-March 2025, that is set to further cut costs, by ÂŁ12m annualised. 

According to a note issued on 27th March by analyst Peter McNally at house broker Stifel: “The $12m annual cost reduction means there should be a clear path to monthly cash flow breakeven in 9 months time.”

I’m naturally sad that so much talent at Seeing Machines is being let go and am well aware that the delayed development of Guardian Gen 3 played a large part in slowing the company’s progress to cashflow breakeven. Hopefully, these talented folks will find good jobs elsewhere and may even return to Seeing Machines as the business grows.

Still, as an investor it’s my job to assess if the reason for originally investing in Seeing Machines is still valid. I’m still convinced it is and reading Peter McNally perceptive analysis is reassuring. He explains: “Seeing Machines results show the company is adapting to a more challenging environment by adjusting its internal costs with the goal of reaching cash flow breakeven in the current calendar year.”

That doesn’t mean I don’t have questions and I hope to get answers to some of those questions at this week’s investor event – the so called ‘Town Hall’. (I can’t think of a Town Hall meeting without a bit of argy bargy — but let’s try and keep it civilised).

Whatever management mistakes delayed bringing Guardian Gen 3 to market it has developed and commercialised world class technology in multiple industries, making some super deals with partners ranging from Collins Aerospace to Mitsubishi and Magna. As someone who knows I could never run a company, I do respect those who possess that ability. Let’s not forget that Seeing Machines is actually saving lives. Not many of us can say that. 

Scandalous

If I’m angry and disappointed, it’s with the car and lorry manufacturers who have delayed implementation of life saving driver monitoring tech in order to save a few dollars. A few dollars that could have been shaved off the bill of materials somewhere less critical. That’s scandalous.

However, even that delay can only be temporary thanks to Euro NCAP’s sterling work and GSR2 regulations. All those OEMs are really doing is damaging their own reputations for safety alongside sales.

Guardian Gen 3

The good news is that in his note McNally confirmed that Guardian Gen 3 is now totally ready, in production and shipping now for various trials, which should lead to much larger orders in due course. 

“The biggest news in today’s results to us is that the Gen 3 Aftermarket product is ready, tested and now in production with early shipments commenced. This is not just the GSR-ready version of Gen 3, but the full Gen 2 replacement equipped to handle over the air updates in a better form factor. This is one of the main factors in revenue and profitability growth going forward, in our view. It should also improve recurring revenue from Driver Monitoring as units go live in the field.”

I obviously want more details on maximum monthly production volumes, prices and so forth. Yet, McNally is right when he describes Guardian Gen 3 as “a significant swing factor in future revenue and profitability, especially with the Mitsubishi partnership referral agreement in place”. 

Moreover, If the Mitsubishi partnership referral agreement delivers the volume of sales of Gen 3 that I expect, breakeven in 9 months may prove overly conservative. 

The main issue I have is separate to that, and relates to the truck manufacturers installing factory fit DMS for ADDW. The EU GSR legislation absolutely demands it. Yet, so far, there is little evidence of the likes of Volvo, DAF, Mercedes-Benz etc installing it. Only in buses have I seen much evidence. I’d certainly like to know if trucking OEMs are dragging their feet on that for the same reason some auto OEMs have.

Fortunately, large enterprise customers appear to be complying and those 7 “big trials” for Guardian Gen 3 that Paul McGlone recently confirmed are clear evidence of that. A win with Amazon would be huge news that could double the share price of Seeing Machines in a day. (I’m hoping we get official confirmation by the end of April). 

Breakeven

Let me be clear. Achieving cashflow breakeven will be a game changer for Seeing Machines. I know, from previous conversations with fund managers and recent ones with City contacts, that there is a tsunami of fund manager cash keen to come into SEE once it has proven beyond any shadow of doubt that it is set to be profitable. I still believe Paul McGlone, Martin Ives, John Noble, Mike LennĂ© and the rest of the team at Seeing Machines can make that happen. 

As evidence of the appetite for investment in the company Peel Hunt has now upgraded Seeing Machines from ‘Reduce’ to ‘Buy’, because of the “upside potential” though the price target remains at 3p. (I’m also expecting Singer to soon initiate detailed coverage).

With US$39.6m in cash Peel Hunt believes SEE has “at least 12 months of runway” and I believe that is more than sufficient time for it to become profitable and the share price to take off. 

I look forward to seeing our guests from Australia this week along with my fellow investors – some of whom have grown older with me.

It’s been a hard few months for SEE and for its investors. Still, I hope the smiles will be back on our faces very soon. 

The writer holds stock in Seeing Machines.

Euro NCAP pushes for quality DMS, as provided by Seeing Machines

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Following the publication of the 2026 Euro NCAP safety protocols, Seeing Machines is on the cusp of a significant re-rate as OEMs and Tier 1s race to meet higher performance requirements for driver/occupant monitoring.

The two documents can be viewed here, courtesy of Colin Barnden, Principal Analyst at Semicast Research: 

The significance of these documents appear to have passed many investors by. However, no less a figure than Richard Schram, Technical Director at Euro NCAP, has confirmed to me that from January 1st, 2026 a new passenger car will not achieve a 5 star Euro NCAP safety rating in Europe unless it has a driver/occupant monitoring system that meets the criteria specified in these 2026 protocols.

The implications of this news are huge for any OEM wishing to sell new passenger cars models in Europe. This is because, even though driver monitoring is mandatory in Europe from July 2026, Euro NCAP is effectively “pushing for higher performance than the regulation does”, according to Schram.

This is great news for Seeing Machines as, being the most technically proficient provider of DMS/OMS with a fast to implement rearview mirror system, it offers the most realistic solution for many OEMs in that timeframe whose premium models will certainly require 5 star safety. [Elon Musk are you listening?]

I’m therefore anticipating a raft of extensions to existing contracts as well as new contracts to secure its services via Magna, but also via its other partners over the next 6 months.

I think that in the short term there will be such demand for its technology that its average selling price (ASP) will not drop significantly even as volumes expand. Moreover, that ASP is, I believe, already at a significant premium to its competitors. 

The upshot is that within the next 6 months, as SEE speeds towards 4m cars on the road with its technology, SEYE will be left in the dust, alongside Tobii and Cipia – which must be feeling the pain from the economic collapse of Israel.

Seeing Machines itself has previously stated that it expects to take around 40 per cent of the global passenger car market for DMS by volume, 50 per cent by value. I’ve long held the view that 75 per cent by value is possible and I think this news from Euro NCAP confirms that there was a sound reason for my holding onto this stock, despite experiencing a roller-coaster ride.

As OEMs, Tier 1s and fund managers realise the implications of this news I expect increased buying of SEE stock as it brushes off misplaced investor concerns. This should push the price up significantly. 

Call me paranoid but over the next 6-8 months I believe private investors should beware market makers shaking the tree in order to acquire their shares cheaply for institutional buyers.

Of course, do your own research as this is only my opinion. Maybe my prediction of a 75 per cent market share of the global DMS market 8 years ago was a fluke.

The writer holds stock in Seeing Machines.

Seeing Machines’ canny acquisition outweighed by Peel Hunt’s reduced price target

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Investors were left scratching their heads as a bargain acquisition by Seeing Machines that enhances its automotive DMS/OMS offering, cements its presence in Europe and secures it more automotive contracts, was outweighed by news that Peel Hunt has reduced its price target from 12p to 9p.

The acquisition was of Asaphus Vision, a Berlin-based company that was owned by Valeo and which has strong IP in AI and machine learning relating to facial recognition and DMS. According to the RNS issued today, it supports a strategic collaboration with Valeo to grow market share in automotive. Moreover, the  acquisition for US$6m (only $2m in the first two years) is “expected to be cash neutral on an operating basis.”

Peel Hunt had previously stated (in a note dated 26th June) that it would reduce its forecasts “to reflect the timeline for the expansion of its driver monitoring systems (DMS) shifting to the right and slower-than expected roll-out of the Gen 3 aftermarket product.”

It that note it stated:“Greater uptake in ‘basic’ DMS has diluted royalty per car, whilst Gen 3 delays mean Aftermarket sales are low-margin end-of -life Gen 2.”

Today, Peel Hunt analyst Oliver Tipping confirmed that view: “Greater demand for low-priced ‘basic’ DMS and the delay in getting its Gen 3 aftermarket product ready to ship, mean FY24 margins are lower than expected. Underlying progress remains solid, today’s acquisition further differentiates its expertise, and the EU regulations mandating more advanced DMS (at a higher ASP) in 2026 keep us bullish on the medium term prospects. We revise our numbers based on this shift to the right and lower our 12-month TP from 12p to 9p, but retain our Buy rating.”

Its forecast revenue figures for the financial year ending 30 June 2025 has been reduced to $76.8m from $91m, with its pre-tax loss forecast to rise to $11.8m from $1.2m, with cash EBITDA falling to $1m from $11.3m. 

Bargain acquisition

Far from being dismayed at these developments, I think the market is being far too pessimistic. Seeing Machines has got a bargain acquisition in Asaphus, which only a year ago was valued at $12.5m by owner Valeo, for whom it was its internal DMS/OMS product development division.  Moreover, it’s tech reached commercial deployment in 3 automotive programmes, including one in China.

According to Peter McNally at house broker Stifel: “While Seeing Machines has worked with Valeo in the past, its work has had to be carefully delineated to account for Aphasus. With the company taking ownership of this asset, it appears that Valeo has now aligned itself with Seeing Machines technology and is evidenced by a statement from a representative of Valeo in today’s release which states, ‘We are delighted with this collaboration. Combining their teams with Seeing Machines, we will benefit from the best-in-class perception software to integrate into our hardware and software architecture for driver and occupant monitoring systems. Together, we will be able to provide more competitive solutions.’

McNally believes this tie up with another Tier 1 automotive supplier, in addition to Magna, is “a sign that the market is increasingly moving toward Seeing Machines’ solution.”

Deepening partnerships

So what are the implications for the future? Well, this is McNally’s take. “We note that less than a year ago, Valeo announced its Smart Safety 360 product that was suggested within the industry to use Mobileye (MYLY.O, not covered) advanced driver assistance (ADAS), as well as Seeing Machines DMS in the same product. We also note that Seeing Machines signed a non- exclusive distribution agreement with Mobileye in February 2023. We wonder what the combination of partnerships including these companies could be in the future. It appears that Seeing Machines has made partnerships/agreements with these companies that could be deepening the involvement amongst them.”

I believe this deal makes Seeing Machines an even more attractive target for an acquisition in the near future as its global dominance grows and high quality DMS/OMS becomes the only game in town.

The writer holds stock in Seeing Machines.

6 reasons why SEE gets bought in 2024

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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-ÂŁ20bn 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.

Magna-ificent performance from Seeing Machines

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Following recent announcements relating to Magna, reinforced by analysis from CEO Paul McGlone at an investor event in London, I’m confident that Seeing Machines’ technology lead across, auto, fleet and aviation will soon start to be reflected in its share price.

The recent news that auto Tier 1 Magna is paying US$17.5m for the exclusive rights to use Seeing Machines technology in its rearview mirrors until the end of 2025, while also agreeing to invest up to an additional US$47.5m, just confirms its global leadership position in Driver and Occupant Monitoring Systems (DOMS). 

Crucially, the cash injection removes any concerns that Seeing Machines needs to raise cash. It is now fully funded to profitability in 2024.

The Canadian Tier 1 Magna has gone exclusive with Seeing Machines in rearview mirrors because it aims to the vast majority of that market, 100% has been suggested by one expert, as no real rival to their DOMS offering currently exists. By partnering with Seeing Machines it has a product that is apparently superior to that of its competitors in terms of price, performance, and time to market. That’s presumably why it won the huge A$125m VW contract in December 2021. 

By 2026, it’s likely that Magna will have won as much as 50% of the overall auto DOMS market in partnership with Seeing Machines – since half of DOMS is forecast to be delivered via rearview mirrors. Thus it will have done to its main rival Gentex what Qualcomm has done to Intel in auto. The huge VW win with Magna should have confirmed this, future wins certainly will. 

It’s no coincidence that both Magna and Qualcomm have chosen to partner exclusively with Seeing Machines. These moves should be seen as part of a strategic land grab that I expect to deliver Seeing Machines at least 75% of the auto DOMS market by volume by 2026.

That is because its competitors (Smart Eye, Cipia, and Jungo) aren’t winning anywhere near the number or volume of RFQs that Seeing Machines is. For example, Smart Eye appears to have effectively been replaced by Seeing Machines in forthcoming BMW models. The 10 BMW models featuring Smart Eye technology are from past wins, such as the X5 (2015) and M8 (2018). 

Of course, OEMs may do some dual sourcing. Speaking to Smart Eye last week its CEO Martin Krantz tentatively said that Smart Eye “will probably be in future BMWs”. I wish him luck but I don’t think it is going to be a threat to Seeing Machines going forward. 

Indeed, investors need to beware of looking in the rearview mirror at market share unless they want to crash their prospects for significant financial gains. For those paying attention to the road ahead, it’s Seeing Machines that is in the fast lane to market dominance. 

Over the past year, Seeing Machines states that it has won 80% of the RFQs for which it has bid. I’m confident it will maintain that win rate with the $A1-2 billion of contracts for which it is currently bidding.

Looking at design wins, Smart Eye currently boasts 94, while Seeing Machines has 120. However, even this figure fails to reflect the latter’s dominance. Not all of Smart Eye’s 94 ‘wins’ made it into production, in contrast, every Seeing Machines design win has hit the road. 

I’ve long admired the Smart Eye people – not least for their PR bravado – but it can’t blind me as to where I should invest my hard-earned dough. I’d also be doing readers a disservice if I didn’t state what I honestly believe. 

Following the Seeing Machines investor presentation Friday, (when the video is posted I will provide a link) I’m very confident that an inflection point has been reached.

Increased margins

From now on license revenues for vehicles hitting the roads will begin to ramp up for Seeing Machines. This is a very high-margin business as the main costs have already been borne in the development phase. It currently has a pipeline of A$395m in auto but this is expected to grow substantially over the next few years on the back of further wins.

Similarly, in aftermarket more large enterprise customers such as Shell are coming along. These margins for selling the product and the monitoring service are much higher than selling indirectly via distributors.

It should also be noted that Seeing Machines Gen 3 Guardian will be launched by the end of this financial year, opening up the prospect of huge scale-up in Fleet sales. The product has apparently been re-engineered to reduce costs yet will be better, with automotive-grade additions and much faster install times. In addition, there is huge money to be made from the service element of monitoring the drivers.

Thus, now there is clear visibility of increasing revenues and cashflows with SEE set to make huge profits over the next few years.

In addition, I’m still confident that a lucrative license deal will soon be struck to deliver See’s pilot monitoring technology into the cockpits of aircraft. Being early is the same as being wrong but I hope by Christmas I’m proven right.

Bids coming

As readers know, I’ve long believed that SEE will face a near-term bid. To that view some have argued that such is its success that it really doesn’t need a takeover to prosper, unlike some of its rivals who hope to be saved by one. I’d certainly agree with the assessment that Seeing Machines could perfectly well prosper as an independent.

However, even if Seeing Machines isn’t ‘up for sale’, it doesn’t mean that it cannot be bought. A wise man recently told me: ‘Great companies get bought NOT sold’. Well, I believe Seeing Machines is a great company.

Ask yourself, how badly must some company want what Seeing Machines has? Its technological lead, data, and market leadership would take years and many billions to replicate for even a company of the stature of Google, Apple, or Amazon. If you had the money (and they do) why wouldn’t you just buy it?

If Magna is prepared to pay millions for the exclusive use of SEE technology for a couple of years, why wouldn’t they want it permanently? Qualcomm, AMD, Intel, and Nvidia also have reasons to enter a bidding war when the starting gun is fired. Indeed, even Gentex does if it wants to win future DOMS rear-view mirror contracts and protect its market share from rivals such as Magna.

There’s even the argument that a consolidator might want Cerence and Seeing Machines to create something very special.

Value stock

As legendary value investor Irving Kahn taught, investing is an art rather than a science but I think were he alive today, he’d take an interest in Seeing Machines as it ticks many of the criteria he looked for in an investment.

The good news for investors is that they can now sit back and enjoy the ride. It has been substantially de-risked, which is why Cenkos upgraded to 25p last week. I expect the other analysts following the company to do likewise in short order as the contracts and license deals roll in. 

The writer holds stock in Seeing Machines.

Will Seeing Machines’ likely Nasdaq listing elicit a bid?

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Rumours that Seeing Machines is planning a dual listing on Nasdaq gained further credibility with the attendance of CEO Paul McGlone at a recent shindig organised by house broker Stifel to promote that very idea to clients. The question is, might a dual listing be the catalyst for a bid?

It’s long been known that a dual listing on Nasdaq has been under consideration at the Aim-listed tech company for a number of years. At a previous investor meeting held online on 24th November 2021 Paul McGlone stated (in answer to the question: ‘Are there any plans to move to a US market?’): “It is in our plan, it’s only sensible that we talk about it. I do imagine that we will end up there but I want to see some additional momentum before we flick the switch on that particular transaction.”

With Seeing Machines coming to dominate interior monitoring with its class-leading DMS/OMS system, it appears that time is drawing close. Indeed, some argue that such a listing would be guaranteed to increase its US profile and enable it to secure more backing from US tech funds.

Stifel served as joint bookrunner on an $85 million dual-listing Nasdaq IPO for Renalytix AI back in July 2020. The price tripled shortly thereafter but has since come right back down. More successful was GW Pharma’s dual listing back in 2013, before it was eventually acquired.

Mobileye IPO

A more appropriate comparison is the Nasdaq IPO of Mobileye, floated for US$5.3bn in 2014, bought by Intel in 2017 for $15.3bn and now in the running for a potential $50bn spin-off IPO, backed by Morgan Stanley. 

Examining the prospectus for the original Mobileye IPO in 2014, indicates that Seeing Machines is set to be a superior business. Not only is it dominant in auto but also in fleet and aviation. Moreover, its robust technology has applications well beyond the transport sector. 

Expected date of dual listing

While it appears that no firm decision has been made by Seeing Machines regarding a precise date for a dual listing, I believe that the much-mooted plan is moving inexorably forward.

My sources indicate that (barring a market meltdown) it is most likely to happen around Spring 2023, by which time Seeing Machines is expected to have achieved several milestones that will have more US tech funds eager to jump in. These milestones include:

  • An order pipeline of $A1bn in auto;
  • A fleet operation that has proven it can scale, boosted by the third generation of its Guardian product, which will be easily incorporated into telematics products for trucks and buses;
  • The launch of a dedicated aftermarket division to sell its Guardian product to niche manufacturers of buses and trucks, with monitoring services sold to their customers; and
  • A licensing deal in the aviation sector.

I also believe that there is an outside possibility that increased momentum in auto and fleet, with Seeing Machines pretty much set to win every contract it contests, could bring forward the date.

Will QC gatecrash the party?

The question is, will the host of chip companies who want SEE’s IP wait until its value has been boosted by a Nasdaq dual-listing IPO before swooping? Moreover, will Qualcomm’s Christiano Amon risk another chip company, or one of the three Amigos (Amazon, Alphabet and Apple) eating his lunch? It doesn’t seem likely. The Arriver acquisition proved Qualcomm fights for want it wants. 

Given the crucial importance of Seeing Machines vision technology to Qualcomm’s Snapdragon Drive automotive stack it seems logical that he will act quickly, to forestall any rival acquiring this important strategic partner. 

Sector ripe for consolidation

The sector is certainly ripe for M&A deals. Even peripheral DMS players are starting to be bought. In fact, one took place late in 2021, with Lattice Semiconductor acquiring computer vision company Mirametrix. The latter has a rudimentary DMS and, according to unnamed sources, went for a ‘huge multiple’ in a private deal. You can see its offering here: https://ir.latticesemi.com/investor-overview/presentations

Note the slide detailing some of the consumer uses for its technology entitled ‘Consumer Challenges’ — it may ring a (door)bell for some investors. The wide range of markets in which SEE’s technology can be used, aside from its transport applications, is one reason it is an attractive target.

Smart Eye would probably love to be taken over as would Cipia. However, SEE is the demonstrable market leader and will be the one that all the major players covet. 

As ever, if you’ve found any value in this article please consider making a donation to a charity of your choice.

The writer holds shares in Seeing Machines.

A$23m Stellantis win for Seeing Machines

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It seems likely that the OEM win announced today by Seeing Machines is for Stellantis, using Magna’s driver monitoring system (DMS) in a mirror.

In any case, given the minimum lifetime value is A$23m, it is a pretty safe assumption that it will actually end up being at least three times that figure.

Cenkos close to upgrading

Broker Cenkos has maintained its 20p price target but admits it really could be lowering its discount rate and bumpting up that target price, given Seeing Machines’ accelerating win rate that is leaving competitors far behind.

Here’s the concluding comment from Marc Bunce, the Cenkos analyst covering Seeing Machines: “This new automotive DMS award comes less than two weeks since the last which further supports our view that Seeing Machines win rate and market share in automotive Driver Monitoring Systems are increasing. It is also reassuring to hear that this view is now also publicly supported by Nick DiFiore with his expectation for 40% market share by volume now marginally ahead of our expectations which represent around 38.5% by volume to 2030. We iterate our Buy recommendation and 20p valuation and note there remains significant upside in this from reductions in our discount rate, small increases in our Automotive market share expectations, increases in our cautious aftermarket expectations and the addition of aviation (we will incorporate aviation when we get visibility into meaningful contributions).”

Certainly, when Seeing Machines announces the wins I referred to yesterday I expect Cenkos to upgrade.

The writer holds stock in Seeing Machines.