Harvest Technology Group Limited - Launching Real-Time Video Everywhere
Harvest Technology Group Limited
Launching real-time video everywhere
Harvest Technology Group Limited (ASX:HTG) licenses its proprietary video compression and encryption technology for low-bandwidth, high-latency applications needing secure real-time streaming video communication. The company delivers solutions for data transfer from anywhere via satellite or congested networks. Harvest offers a solution which enables real-time monitoring of remote locations, real-time feedback for field technicians, and secure video conferencing. In 2022 Harvest has launched two new product platforms with further product developments expected. The company raised $6.78m in March via a private placement in preparation for an increase in sales tempo and customer numbers. Harvest is on the verge of large-scale roll-out of the Infinity Nodestream secure video transmission product suite through reseller agreements with the major maritime satellite communications operators. The company has launched its own Remote Inspection Service (RiS) and a US business focused on enabling remote field technician support via real-time video over low-bandwidth networks and satellite. Finally, Harvest has successfully trialled Nodestream with Cisco’s Webex video conferencing product. The company has a successful product and is now focused on converting these opportunities to revenues.
Business model
Harvest licenses its hardware and software solutions to customers. The company has a Perth Headquarters and has expanded over the past twelve months, establishing sales offices in the US and UK/EMEA. HTG is currently focused on converting reseller agreements with Inmarsat, Speedcast and Marlink maritime satellite service providers into actual licensed customers with the target of more than 1,000 licences by end CY22.
Q3 focused on positioning and gathering momentum
Vessel operations ceased in Q2 hence revenues were down in Q3 ending in a quarterly operating cashflow of -$3.65m. HTG retains $6.96m cash and reports a strong increase in monthly recurring revenue (MRR) for its core Infinity Nodestream product. This fiscal year Harvest has raised capital, launched a US SaaS business (Opsivity), launched the Remote Inspection Service (RiS) using Infinity Nodestream to domestic customers, provided a proof of concept for integration with Cisco Webex, signed three maritime satellite reseller deals, and successfully demonstrated capacity to the Australian Defence Force and Federal Government. Events are moving quickly, and we expect to see these opportunities convert to sales over the course of CY22 and CY23. The company is targeting 1,000 Nodestream licences by December 2022 from less than 100 at the end of March.
Valuation base case at $167m ($0.29/share)
Our valuation is based on a DCF using a Beta of 1.47x and risk-free rate of 3.5%. We have modelled three cases differentiated by customer conversion rate, cost of hardware manufacture and licence fee received. Our downside case values HTG at $123m, while we can estimate upside to $347m. The crucial period to achieve sufficient momentum in sales to justify these valuations is in CY22.
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- Harvest Technology Group Limited - Launching Real-Time Video Everywhere16 Jun 2022