In a recent note, UK brokerage Peel Hunt has spotlighted the potential of Seeing Machines Ltd (AIM:SEE, OTC:SEEMF), the advanced computer vision technology firm. The brokerage firmly believes that the company's shares are undervalued, suggesting they are worth 12p each, a figure that's more than double the current trading price. But what's driving this bullish assessment?
A year of surpassing expectations
For the uninitiated, Seeing Machines has been making waves in the tech industry with its AI-powered operator monitoring systems. These systems, designed to enhance transport safety, have been installed in over a million vehicles globally. The company's financial performance for the year ending 30 June 2023 was nothing short of impressive. The company reported a revenue of US$57.8 million, marking a 49% increase from the previous year. To put this into perspective, this figure exceeded the market's consensus estimate, which was around US$54 million.
The momentum continues
The company's growth isn't just reflected in its revenue figures. Key performance indicators reveal that the number of cars equipped with Seeing Machines' technology has skyrocketed by 143% over the past 12 months. This means that over a million vehicles are now safer, thanks to their tech. Furthermore, their annual production volume has seen a substantial boost, increasing by 101%.
Paul McGlone, the chief executive of Seeing Machines, expressed his satisfaction with the company's trajectory, especially noting the achievement of crossing the one million threshold for cars equipped with their technology.
Strategic partnerships and investments
A significant highlight of the past year was Seeing Machines' collaboration with Magna International (TSX:MG). This partnership, which focuses on integrating their monitoring system technology into rear-view mirrors, brought a whopping US$65 million investment into the company. Such a capital boost ensures that Seeing Machines is well-poised to execute its business strategy effectively.
In the automotive sector, Seeing Machines has now won 15 individual programmes with 10 OEM customers. This has increased the total initial lifetime value of all its opportunities to US$321 million. Additionally, it has signed an exclusive licence agreement with Collins Aerospace, a leading avionics company.
Peel Hunt's take
Peel Hunt's note underscores the company's continued momentum in both the Automotive and Aftermarket divisions. The brokerage firm particularly emphasises the potential for profitability by FY26. Despite the company's achievements and the promising outlook, Seeing Machines' share price has remained stagnant over the past year. Peel Hunt views this as a golden opportunity for investors, especially given the recent insider buying.