TerraNet - China calling

TerraNet’s 2017 earnings show the group continuing to move closer to generating licence revenues from its technology portfolio, while keeping a tight control over costs. China is proving a key market for the group: Chinese tech giants, Tencent Gaming and Alipay, and cellphone manufacturers, Oppo and Vivo, are shortly to begin trialling TerraNet’s software. Furthermore, the recent launch of the Android Oreo 8.1 operating system should enable the group to resume its launch of proximal connectivity SDKs in China later this year. Year-end cash reserves were SEK62.4m ($7.6m). Our forecasts suggest this will be sufficient to fund the business until late 2018. Helped by lower than forecast cash burn in 2017 and the prospect of lower capex and WC outflows, we have increased our valuation range for the shares from SEK12.6-14.4 to SEK13.4-15.4.