Cyanconnode Share Discussion Threads

[multibagger] 07/7/2021 14:30

Hi SBP,

You could be well right that in the scheme of things/rollout that the 3m EESL retrofit/adaptation should be doable in the near term and potentially the next bit of news. My own thinking is that there maybe something like a 50k pilot for the same, before we get stuck with the remaining 2.95m :)

ITT - you are most welcome ! :)

[stupidboypike] 07/7/2021 13:38

mb, I would hope that the first announcement with Intellismart would be around the 3m units they need to retrofit with Cyan technology. You would have thought that should be able to progress reasonably quickly. Best regards SBP

[inthetin] 07/7/2021 13:22

Thanks MB. Appreciated.

[multibagger] 07/7/2021 13:17

Hi ITT,

We may get a trading update/guidance attached to some commercial news when it is announced - not sure we will get a standalone one.

In the absence of new contracts, I expect any update to indicate how the backlog of rollout contracts is being delivered and information from RoW. There is plenty to keep us busy for this FY IMHO. I will be looking out for any semiconductor/electronic component supply chain issues.

In India, I see this is as a transition phase to Opex model, so don't expect a huge throughput of newsflow at this time, but would love to be pleasantly surprised !

[inthetin] 07/7/2021 13:10

Hi MB

Any thoughts on a trading update for Q1?

If we're not going to get one, why do you think that is?

Cheers

ITT

[multibagger] 07/7/2021 12:54

Hi ITT,

The Intellismart MoU is a significant step and now formalises a commercial relationship. This has to now translate into actually doing business together, bidding for contracts and actually implementing them. One being a giant (Intellismart) and other (CYAN) a tiddler and by the nature of their size differential, there are likely to be teething issues around processes/communications/permissions/personalities etc till they learn how to "dance" and become slick at the business end.

So my gut feeling is that there may be small size projects/pilots to cautiously kick start this relationship, rather than dive in at the deep end straightaway with a multi-million smart meter contract.

In other words, I won't be surprised or disappointed, if the next RNS from India reflects something modest and along these lines, rather than a huge contract blowing the doors out !

[inthetin] 07/7/2021 12:42

Hi MB

I think that the next news that we receive re an Indian contract for Cyan will reveal a huge amount. Until then, I haven't really got a clue what's going on and will sit back and watch.

What are the chances of a trading update for the first Q/E 30/06/2021?

GL

ITT

[multibagger] 07/7/2021 12:29

Hi MC,

I think I appreciate where you maybe coming from and given what we know in terms of current rollout and contracts, 40p sounds a good premium. However, my estimate of £1+ is based on what may pan out contractually over the next couple of years....India is the jewel in the crown in terms of potential, but there are significant opportunities that we seem to be pursuing in the Rest of the World according to the last presentation.

I don't think for a moment that the BoD will sell out in the 40p range given what they are telling us and I suppose shared with Funds before the recent placing. Time will tell, but take a look at what happened with CLSN in terms of the buyout price/fundamentals.

[major courtenay] 07/7/2021 12:27

The two latest senior appointments made me wonder about that. “To lose one senior position to a potential Trojan horse may be regarded as a misfortune, to lose two may be seen as careless.” (With apologies to Oscar Wilde).

[multibagger] 07/7/2021 12:24

Hi ITT,

I am not sure that EESL/Intellismart have CYAN over a barrel ?

EESL had won orders for about 10m smart meters which they tried to implement but apparently came a cropper from a technology perspective as they went solely with GPRS I believe. It could be that ESSL/Intellismart approached CYAN/were told to approach CYAN on the back of the Indore smart meter rollout.

So as I see it, we are the cavalry riding to the rescue of some very red faces at the top of EESL and Hardman or one of the other Research notes said that possibly 3 million meters were in play for retrofit to sort out legacy issues in these contracts (the majority of the 10m never got installed apparently). As these are EESL contracts which were done and dusted, there may be less margin for us, but going forward in the Opex model with hybrid (GPRS+RF) are margins would be largely protected (allowing for volume discounts).

I think partnering with Intellismart brings the volume of smart meter contracts which would have been very difficult to do on our own and also ostensibly the "blessings" of the Govt and reassurance that the tech solution from CYAN works.

[inthetin] 07/7/2021 12:00

IMO, EESL/Intellismart have CC over a barrel and could take control at whatever price they choose. Without them, CC doesn't have plan. I get the impression that they are pulling the strings already anyway.

[tightfist] 07/7/2021 11:10

Hi MC,Interesting viewpoint, one has to continue to wonder why Intellismart and/or EESL would add all that value to a Third Party?! And at least not require a share of the action; I am thinking predominantly India..On the other hand the BoD are shrewd and also have plenty of skin-in-the-game, so a bargain sale feels unlikely unless there are signs of more emerging competition (in whatever guise) than I am aware of. Do we have any insight to the status of tendering?.Cheers, tightfist

[major courtenay] 07/7/2021 10:20

I have seen quite a few times, on this board and elsewhere a target of 100m market cap prior to t/o, c. 4x where we are now, giving a final share price of 40p. Obviously I would be very happy if Multi turned out to be right, but my experience is that final takeover prices tend to fall short of investor hopes, and often quite dramatically. Time will tell.

[multibagger] 06/7/2021 19:24

Good to read some interesting thoughts and comments...

FWIW, IMHO The company will be taken over in the fullness of time, it is highly probable in 3-4 years possibly or sooner if there is an exponential rise in visible guaranteed revenues. It could be private equity - similar to a Calisen/CLSN type of deal.

Based on the trajectory, my guess is that 2021/22 could see double digit revenues in millions, if semiconductor shortages and/or another wave of Covid don't put paid to implementation in India.

Given that JC has done $600m/5 exits = $120m per exit average. I think CYAN could be his last commercial gig and therefore I would speculate at least $240m as a figure that may get him interested.

My guess is when a takeover happens it could be £1+ per share (as things stand now)...however, I will keep this under review/dynamic based on commercial developments/news.

[inthetin] 06/7/2021 16:41

I do think 25p-30p would do it.

[emptyend] 06/7/2021 16:36

I think there is every chance the company will be taken over - but by whom and at what price? Who knows? Could be a range of candidates, given the industry position of Cyan.....

[major courtenay] 06/7/2021 16:19

At this rate the whole company will be taken over for 20p a share.

[stupidboypike] 06/7/2021 16:11

ee - totally agree with everything you have written! Best regards SBP

[emptyend] 06/7/2021 15:56

1. I'm not a fan of restructuring options. The reason that there was no incentive in the existing structure is that options with strikes at 30-40p are virtually worthless - and JC has only himself to blame for that!2. Neither am a fan of dishing out large amounts of additional options with a fixed strike, even if thirds don't vest for another year or two. 3. Materially lowering the strike prices adds a load of value (aka cost to shareholders that will be charged against the P&L). What justification is there?If I had been on the RemCom, I wouldn't have stood for it!However, as a signal to the market, they plainly expect material share price gains over the next 2 years - hence locking in the package now. It seems the confidence of S.Chari and Gervais/Miton may prove justified? They have to get up to 14.5p for the options to be worth a bean to exercise.....and my guess is that a corporate deal will emerge before 2024.

[inthetin] 06/7/2021 09:34

Hi MB

I'm an optimist too but I'm not sure that I will be holding many of my Cyan shares should the share price ever reach £s.

GL

ITT

[multibagger] 06/7/2021 08:48

Morning ITT,

You are right - you have put it more eloquently !

I would be happy to see a share price of around 43p and expect it to happen in due course....though when the time for a takeover/exit for the Company occurs I think the market cap will be several hundred million hopefully with a share price in £s.

What we need is some visible, Opex revenue spanning 7-10 years from several million smart meters - this is doable in a 3-5 year time frame given our EESL MoU and many irons in the fire across the world. Takeover of revenue/ebitda multiples for tech companies will do the rest ! I am an optimist :)

[inthetin] 06/7/2021 08:34

Hi MB

My guess is that they will never need to raise cash to pay for these shares. They will probably wait until the share price is at a level that they are happy to exercise their options (e.g. 43.5p (3 x 14.5p)) and then buy & sell simultaneously.

I see them as 'bonus' shares (not an incentive) for JC & HP and will be a very happy chappy when they exercise them.

Cheers

ITT

[multibagger] 06/7/2021 06:54

Good morning all :)

A number of ways of looking at it/feeling about it/reacting to it I suppose and largely depends on how your personal investment in CYAN is doing.

No right or wrong way to go about it as it is a point of view but I am supportive of the options, as JC and HP have shepherded the Company from a very tight and difficult situation (which in my thinking was not strictly of their making, though communication could have been better). Markets like India can be exceptionally difficult to navigate and they underestimated the time it would take for contracts to be awarded etc (I did so as well).

Also City rumours have it that they have made salary sacrifices/deferments to salary to protect the available cash earlier and JC (and another loaned £400k) sometime recently to secure working capital as was RNSsed.

Re Options vesting, though I do not have personal experience, I have seen Directors of listed companies sell some of their own holdings at a higher market price, to then purchase shares available to them at a lower share price made available through their options. That way, they sell some shares and then use the proceeds to buy up a whole lot more of the same shares.

I suppose as CYAN is listed in the AIM market, holdings which are kept for 2 years become free of IHT (in most cases), so I think that they may prefer to raise the cash to actually buy the options/shares they are now entitled to. I suppose it all depends on their individual circumstances.


All said and done, I think the share price will be very significantly higher in the next few years and the ducks are being lined up....JC and HP are key players in the Company and I am happy to see them hugely benefit from their efforts too, as long as they create value for us shareholders. I won't begrudge them that !

I am speculating/hoping that we may have some commercial news in the next several weeks/months from the MoU with EESL or from Thailand.

Good luck all !