bullish
Structural Monitoring Systems - Earnings at inflection point
SUMMARY
- RaaS Research is initiating coverage of vertically-integrated aviation designer and manufacturer Structural Monitoring Systems (ASX:SMN) with a DCF derived valuation of $0.82/share, representing potential capital upside of 44% from the current share price.
- SMN delivered its maiden EBITDA profit in FY24 and we expect the company to maintain profitability into FY25 while bringing key new products to market.
- A likely decline in contract manufacturing revenues to make way for higher margin own brand products should have a positive impact on group gross margins going forward, adding to the earnings leverage from expected revenue growth (management have forecast 25% revenue growth in FY25).
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