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Starcom on investors' radar as tracking gains traction

Enhanced by the internet of things, artificial intelligence and other tech advances, however, Starcom’s new range is now in the eye line of some big hitters.
Electric bike
Electric motor bikes might soon carry a Starcom tracker

Is the market waking up to the potential at Starcom Plc (LON:STAR)?

The company was one of the pioneers of what we now know as telematics.

Helios was Starcom’s original telematics/vehicle tracking device and still accounts for the majority of revenue.

Telematics pioneer

But a new suite of products has started to make its mark and it is the potential for these that has started to resonate with investors.

Indeed, having just completed a placing to raise £475,000 at 1.3p in October, a private investor contacted the company in January to offer the company a further £250,000 at 2.25p.

That investor must be pleased as the share price has since risen to 2.92p, its highest for almost a year, following an upbeat trading update this month.

Tracking in one way or another still lies at the heart of the business.

AI and internet of things

Enhanced by the internet of things, artificial intelligence and other tech advances, however, Starcom’s new range is now in the eye line of some big hitters.

Kylos, for example, is a barometric pressure monitor.

Originally designed for aircraft passengers, it switches off when you get on a plane and comes back on when you get off, but new applications are burgeoning.

CropX, a soil moisture measurement company, has started to use it as a component in its systems.

Imagine a farmer never having manually to monitor the amount of water on crops again. 

CropX/Kylos does it automatically and controls the irrigation process as well.

Last October, Starcom also announced a major European industrial group was looking at Kylos as a way to white label a product to track air, land and seaborne freight.

The first batch of 1,000 units has since been increased by a further 200.

Tech gaining credibility

Talking to Proactive, Michael Rosenberg, chairman, said contracts such as these underlined the growing credibility of its technology.

To go straight to supplying a major end user would be a huge step up, he added, as previously Starcom had to rely on distributors to market its products.

Other products, too, are gaining recognition and some notable traction.

Ship container tracking product Tetis recently won a three-year contract with US group WIMC worth up to US$4.5mln.

As well as monitoring the movements of containers, Tetis can also indicate if they have been interfered with in transit.

Watchlock, a new smart padlock, was launched three years ago, but has now been significantly improved.  

Starcom is also still in the running for a monitoring contract for the United Nations having passed a pilot scheme in the US and Africa.

New markets

Rosenberg says the UN contract is down to the last few bidders and even if ultimately Starcom is not chosen getting this far in the process is a further endorsement of the technology.

Even for the original Helios product, new markets are opening up for its latest version.

An electric motorbike maker in the US is in talks about embedding a Starcom-supplied tracking device.

This is the ‘Holy Grail’ scenario that Starcom wanted to happen but never materialised with Helios.

Rosenberg is more optimistic this time around.

January’s update reported that the order intake overall is close to the highest seen yet for the company.

It is the new products that are driving this, added Rosenberg, with the added bonus that margins are almost double those on Helios.

Margins rising

Reflecting that, the latest update indicated 2017 sales would rise to US$5.5mln (2016: US$5.1mln) but underlying profits [EBITDA] will do a lot better and be not less than US$500,000.

After tax, there would be a swing from a loss of US$2mln to break even.

Recurring revenues are also rising and will account for approaching US$2mln of this year’s total, said Rosenberg, who believes Starcom has reached a pivotal point in its fortunes.

“We have moved from just manufacturing a product to be taking seriously as a tech partner and the company is in its best place since it listed on AIM.”

Starcom is valued at just £7mln currently, but if the recent momentum continues it may not be for much longer.

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Starcom Plc Timeline

February 27 2017
November 12 2015
December 29 2014

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