Simigon Share Discussion Threads

[daz] 14/4/2017 18:42

Worth giving your broker a call on that BG

I tend to think many execution only brokers will take the easy option, which is to do nothing!

[brummy_git] 14/4/2017 17:13

Yes Daz - I suspected that may be the case.

Presumably though some UK brokers may be are to tell whether the end-beneficiary is British or not, and then at least apply the reduced 15% rate (Re UK tax treaty), rather than the higher generic 25% applicable to all other overseas shareholders?

[daz] 14/4/2017 16:49

Unlikely I think BG as most people have their holdings in nominee accounts

[brummy_git] 14/4/2017 16:44

Separately does anyone know whether its possible to reduce the with-holding tax rate on Simigon's dividends - say from general 25%, to either 15% (ie reflecting UK tax treaty) or even better 0%?

[rhomboid] 14/4/2017 16:42

Thx daz , that's very helpful

[daz] 14/4/2017 16:37

Yump, as BG says, it would help if you were more specific. I've searched through some of your posts and found the following:-

You quoted disbelievingly on
"... the Company's great revenue and profit visibility for 2017 and beyond".

This is referring to the Saas revenues and order book.

You commented on the company statement on the Israeli contract.
"Once the expected contract has been signed it is due to be delivered within 18 months and its expected revenue contribution has already been factored into management's expectations for the year ended 31 December 2016."

I think it's quite clear that they added it to expected, rather than actual revenues and this explains the revenue shortfall compared with expectations.
The company did say that they had now received the US signoff, which is a pre-condition for the contract, so I would hope it finally gets signed in the next 2 or 3 months.
I would add that they are a hostage as to how fast governments move, which is a weakness but once they are signed, not only do they receive the value of the initial but are in an excellent position to be awarded follow on orders.

You've made several comments on the "June 2013 contract"
The company said this in the finals '... The Company now expects to complete all system delivery milestones and receive the requisite client confirmations within the first half of year 2017.'
Yes it has taken a long time and yes they have probably had to provide extra features at their own cost but the end is in sight and they finally have a new reference site.

[daz] 14/4/2017 16:12

Rhomboid,

Ami Vizer, the CEO, spent the first half an hour going through the bigger picture, the vision if you like: - the likely move to more and more simulated training and the new sectors the company has or could enter into. I think that what's different this time is that virtual reality is finally gaining traction and could snowball in the years to come and Simigon will have their niche.

They are a very small company, with limited resources, who are still building their customer base. As a supplier, their progress is driven by the rate of adoption of simulated training by their customers including government organisations and they are not in a position to influence how fast this goes.

I think part of their progress has been overlooked; their recurring Saas revenues have grown to 57% of total revenues and as they add new resellers and existing ones extend their use of their platform, this will undoubtedly increase and they are not such a hostage to winning big contracts as they were before. As mentioned earlier they have also increased the size of their order book, so that they have much higher visibility of revenues than before but this is not being recognised.

I think part of the problem is that the company being foreign based (US and Israel) are rarely in London and the lack of promotion and the bland nature of their announcements means the company is not well understood. I did say to them that more could be done to promote the company. They ought to be going to some of the investor shows or doing the occasional appearance at one of the investor evenings that different groups organise.

Hope that helps

[brummy_git] 14/4/2017 15:31

Which Qs are you specifically talking about Yump? Masses of stuff has been asked over the past few months.

[yump] 14/4/2017 15:24

Did anyone ask them any of the 'awkward' questions that were raised on here previously ?

[brummy_git] 14/4/2017 15:23

Many thanks Daz - yes, my gut feel too is that they wouldn't delist either.

[daz] 14/4/2017 15:04

BG.

I only met the directors for an hour, so only really first impressions. The CEO came across as earnest and conservative, rather than the flashy type often seen with AIM companies. The FD didn’t say so much but is quite young and appears to be relatively inexperienced, which might be a weakness.

Re delisting. Probably the most pertinent point is that the directors hold a minority position. Ami Vizer holds 22% of the shares and even though Jeffrey Braun, who looks like a long time associate, holds 13%, that still only adds up to 35%, so they would have to persuade some of the institutions it was worth their while.

As a small company, there are other advantages to being listed


The scutiny that comes with a listing and having a track record I think means that customers can feel more secure with dealing with the company

Acquisitions are much more easily done with a listing and a takeover were it to happen would also probably be at a higher price compared to a private company.


I'd also doubt they would be doing the rounds meeting investors, if they were planning to take the company private
There are no guarantees though.

[rhomboid] 14/4/2017 14:35

Hi Daz
Very helpful summary, what stops me putting money here is a general sense that I'm investing with no real clue as to how the controlling directors want to see the business develop as a public company. Are you aware of anything that might assuage my concerns?
Thx

[brummy_git] 14/4/2017 14:13

Many thanks Daz – excellent write-up.

By the way, what do you think of the CEO and FD? What is the likelihood of the shares ever being delisted from AIM, as a few Israeli businesses have historically done?

[daz] 14/4/2017 13:08

I attended a company presentation yesterday and found it very useful, here's a summary. Hopefully it will be of interest.


The company is transitioning to a Software as a service (Saas) model, with 57% of revenues now coming from this source and which will increase further as a percentage this year. The order book stands at $23m, spread over a number of years and this provides substantial visibility of revenues both for this year and guarantees they will be profitable this year.

Simulated learning is likely to grow significantly over the next 5 years as the Y and Z generation enter employment and it becomes more and more the norm, so the market opportunity for Simigon in the medium term is substantial.
Learning by doing is also the most effective way to learn.

Although the company has traditionally focused on military aviation, where there is a need to train pilots before they actually fly an aircraft, there are also other industries like oil and gas and crane operation where training for critical scenarios is vital and so there are many opportunities and they are working with resellers to expand these markets as being a small company, they don’t have the capability to do it themselves.

The account receivables of $2.9m is due to the a number of factors :- the transition to the Saas model and the large contracts, a substantial amount of this has been collected since the year end. Cash flow was similarly affected and there should be an inflow this year.

I came away thinking that given most of the market cap is covered by cash, there is a substantial opportunity here. Yes, the large contracts are going to be lumpy and unpredictable but the forecasts are conservative and don’t make allowance for any wins over the next few years.
Given also that they have a substantial order book and a high level of visible recurring revenues, there is also not much risk and so you can play the long game and if they do gain the expected traction in new markets, then the price ought to substantially higher in a few years time.


Like Rivaldo, I would have bought more had the price not shot up yesterday.

[rivaldo] 13/4/2017 09:59

Can people please stop buying - I wanted to top up :o))

[yump] 11/4/2017 22:51

Hooley

Are you human ?

Judging by the weird style, content and nonsense in some posts, I'd swear there are rogue bots around just making random posts. The cliches don't even make sense. Is that what happens to the auto-bots used in elections - afterwards they are just discarded to run riot over the net posting surreal stuff on forums ?

[the big fella] 11/4/2017 22:36

I prefer to commit to companies that demonstrate strong management, business acumen and the ability to commercialise products generating profit growth over a sustained period. I see no evidence of that here.

[hooley] 11/4/2017 22:29

Put aside cynicism and confine your assessment to the whole statement. If you do not commit, then you will never make either a loss, or a profit!

[battlebus2] 11/4/2017 18:35

Lol 😂

[cockerhoop] 11/4/2017 18:07

'Successful' investment analyst specializing in Israeli Aim may strain the norms of credibility :-) Only teasing honest!

[yump] 11/4/2017 18:05

ADGO is a bottom pickers punt. Same old. Float on AIM, watch the punters get mugged, then the bottom pickers start pretending its 'got something'.

[pj 1] 11/4/2017 17:36

Hooley- shouldn't you really have stated that you were a 'successful' investment analyst?

[cockerhoop] 11/4/2017 17:32

Hooley,

Any particular reason you extol the virtues of the paying of a dividend (incidentally SIM have reduced theirs by 75% with $8m cash) and carrying out a share buyback and then recommend a company that does neither?

[hooley] 11/4/2017 17:09

Have held this one for 6 months and added periodically. Careful reading of statement is very encouraging. Payment of a dividend - and buyback - are the best signals I know. I was an investment analyst for over 30 years. Have a look at Adgorithms - still plenty to go for.

[dgwinterbottom] 11/4/2017 10:46

Has anyone thought of emailing the cfo and asking for some answers to questions?