Spectra Systems Share Discussion Threads

[whereareallthemugpuntersyachts] 26/10/2013 20:11

I don't think any of the spivs investing in this company actually have any clue what this company actually does but talk endless b.s. about a market that has 'many barriers to entry' ?

How would you know ?

[masurenguy] 26/10/2013 19:32

Interesting company in a market that has many barriers to entry. Shares seem to be quite tightly held too.

Shares Issued
There are 45,251,370 shares in issue (as of 28 August 2013).

Major Shareholders as of 28 August 2013:
Blackrock 9.86%
Artemis 8.07%
Oussama Salam (Director) 7.88%
Maunby 7.71%
Seine & Co 7.58%
Albany International 6.98%
Standard Life 5.69%
Clearwater Capital Group 4.01%
Nabil Lawandy (Director) 3.89%
Total: 61.67%

Shares Not in Public Hands
In the terms of the AIM Rules published February 2010 and insofar as it is aware, at 28 August 2013, 12.69% of the Company's AIM securities were not in public hands.

Restrictions on Transfer of AIM Securities
4,640,894 Ordinary Shares (AIM:SPSC) trade with the following restriction:
The newly issued common shares, $.01 par value per share, of the Company ("Common Shares") which were issued pursuant to an exemption from registration under Regulation S promulgated under the US Securities Act of 1933 (the "US Securities Act") and certain previously issued Common Shares which were issued pursuant to an alternative exemption from registration promulgated under the US Securities Act are restricted securities as defined in Rule 144 of the US Securities Act and may not be offered, sold or otherwise transferred except pursuant to an effective registration statement or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the US Securities Act.

The remaining 40,610,476 Ordinary Shares (AIM:SPSY) trade without transfer restrictions.

Company website:

[hezza123] 22/10/2013 18:47

Couldn't resist adding a smidgen at 24.5p this morning.

[hezza123] 21/10/2013 23:45

That RNS came out 3 weeks ago under the SPSC ticker didn't it?

That sale at 22p is indeed very odd. Unless it's a forced sale that had to be done by a broker at any price...? Am tempted to add but will see what tomorrow brings.

[battlebus2] 21/10/2013 18:55

Spectra Systems to acquire key assets of Inksure Technologies Inc.
Print
Alert
Spectra (Unres) (LSE:SPSY)
Intraday Stock Chart
Today : Monday 21 October 2013


- THIS ACQUISITION FURTHERS OUR COMPANY STRATEGY OF PENETRATING RELATED MACHINE-READABLE AUTHENTICATION MARKETS SUCH AS TAX STAMPS AND BRAND PROTECTION.

PROVIDENCE, Rhode Island, Oct. 21, 2013 /PRNewswire/ -- Spectra Systems Corporation, a leader in machine-readable high speed banknote authentication, today announced that on October 1, 2013, it entered into an Asset Purchase Agreement with Inksure Technologies Inc. (OTCBB:INKS) to acquire substantially all of Inksure's brand protection and tax stamp authentication assets, including its long-standing customer relationships and authentication products. The transaction is subject to various closing conditions, including Inksure stockholder approval and the approval of the Israeli Office of the Chief Scientist to the transfer of Inksure's Intellectual Property. The closing date of the transaction is anticipated to be in December 2013.

Inksure develops, markets and sells customized authentication solutions designed to enhance the securityof documents and branded products, to meet the growing demand for protection from counterfeiting. In this context, "counterfeit items" are imitation items that are offered as genuine with the intent to deceive or defraud. Inksure's technology is applied to consumer items and high-value documents using a proprietary verification system that is available on, among other platforms, most smart phones.

"The expansion of Spectra's business beyond physical banknotes and secure software based transactions into consumer goods and particularly tax stamps, will allow us to utilize our blue-chip credentials with central banks and the gaming community to gain market share throughout these segments of the authentication industry," said Nabil Lawandy, CEO of Spectra Systems Corporation. "With governments seeking to raise more revenues, we believe that the integrity of tax stamps will increase in importance and continue to support a strong case for the use of the field deployable authentication technology developed by Inksure."

[stewjames] 21/10/2013 18:10

Sell at 22 when the bid is 27? Ouch. There's someone who's learning a quick lesson about always setting limits when placing a trade.

Not loving their comments about "money laundering". Is the cheap gag really worth the negative connotations?

[shanklin] 21/10/2013 14:50

Some very messy selling unless there's some non-RNS'd news about.

[protean] 21/10/2013 14:15

Price getting whacked today.

[protean] 15/10/2013 18:08

A tick up today. No trades shown but possibly a larger delayed buy still to be printed.

[shanklin] 02/10/2013 11:59

Yes, bit bizarre that they provide sophisticated products to central banks but have no clue about how to update their shareholders via RNS.

[battlebus2] 02/10/2013 07:29

Yes very annoying and great at the same time.

[harrogate] 02/10/2013 07:24

Small deal announced which looks good if not that significant but low risk. The inksure website tells you all there is to know about what they do and it does seem an easy way into these markets. The SEC filings that they link on the website are very detailed and good background. They do need to get the RNS out on both tickers though ..bit annoying !

[protean] 02/10/2013 07:19

"The expansion of Spectra's business beyond physical banknotes and secure transactions into consumer goods and particularly tax stamps, will allow us to utilize our blue-chip credentials with central banks and the gaming community to gain market share throughout these segments of the authentication industry. The Board considers this to be an exciting acquisition for Spectra which will make a significant contribution to our future profits, both directly and through the elimination of duplicated costs."

An acquisition "which will make a significant contribution to our future profits" - sounds good.

[protean] 30/9/2013 08:56

WH Ireland obviously positive if they say that the company has good visibility for H2 and retain their buy recommendation and 53p target.

[harrogate] 30/9/2013 08:54

Isn't that a good thing if we think it is undervalued since we can get more at time of more certainty and better visibility. I actually thought the results were a mixed bag and slightly confusing. The clear signal that high margin phospher sales are struggling and will be replaced by sensor sales ( on which the broker has stated we donlt know how much we will make) was a negative for me short term in fact

[protean] 30/9/2013 08:54

The share price had risen already so possibly people taking profits - buy on the rumour, sell on the news etc.

Also perhaps a few wanting to see things happening more quickly and not having the patience to hold until value outs.

A good chance to top up on the pullback if you're positive. Like you say, results positive and future potential very good.

[somerset lad] 30/9/2013 08:51

You put out results saying (on the firmest basis) that you'll meet expectations for the year AND you reveal a new product (for banknote cleaning) attracting significant interest from the ECB and the Fed with likely IP protection and huge potential value AND ...

... the share price rises materially, of course.

Or not.

[stewy_18] 27/9/2013 11:34

ps, Does anybody konw why some RNS's show up on investegate.co.uk under the ticket spsy and some spsc?? I can't find the latest RNS's on either. I will email the company for clarification.

[stewy_18] 27/9/2013 10:16

Had a look at the results. They seem to be burning $4 million cash a year. So with $14 million left, there shouldn't be any need for a placing. They say they are going to hit forecasts for 2013. The forcasts I have are $7.8 million sales with a $864,000 loss for the year. So that means they will have to do $5 million for the 2nd half of the year. They mention this will be covered by half of the large order from the central bank mentioned here:-



So, they may reach the tipping point in terms of profitability in 2014, but not this year. The brokers note states that this $10 million order may not be profitable so I don't expect any fireworks in the second half, unless they receive new contract wins.

I was a bit concerned to read that phosphours sales were down 33%. This is the reoccurring part of the revenue stream and also has a high margin. However, they go onto say:-

Based on the release of the new $100 USA banknote in October of this year, we believe that the typical mix of denominations will be restored and our phosphours sales will return to their historical levels.

So I think we will have the added bonus of the phosphorus sales returning to normal in 2014 as well as the second half of the large bank contract.

The 2014 forecasts are where it gets really interesting, with revenues forecasts at $16.5 million and PTP of $2 million and EPS of 2.9 pence. So a forward P/E of 11.

Again, I would reiterate that this is not cheap with a forward P/E of 11. But, with a large %age of the revenues being reoccurring, I can only see Spectra going from strength to strength. The bank note cleaning process looks very nice indeed, but again development will involve cash burn. However, things look very good IMO over a 3 year time period.

The next RNS's I would like to see are the contracts that bring in the reoccurring revenue (the $10 million contract was a one off). These are mentioned in the initial coverage brokers note. Once these start to come in, I think Spectra will be a very exciting prospect. I have listed the potential contracts below, the end figure is the NPV per share.

I like the product here and the think they have good pricing power in a niche market. I'm not as convinced as others about the downside protection of the balance sheet because of the cash burn situation (that could increase in the future if they need to develop the note cleaning product), but I agree the risk/reward looks compelling.

Disclaimer: I hold.

As always comment welcome

Regards

Stuart

Potential contracts


Central bank - Material Covert materials deliverable into multiple bank note denominations High Recurring 4.0 23.5

Asian Bank - Estimate Procurement process delayed - likely to be a materials contract Medium Recurring 5.00 34.3

China - Estimate Initial in-country marketing commenced - likely to be a materials contract Medium Recurring 5.00 34.3

Channel Partner - Estimate Multiple contract opportunities leveraging partner relationships Unknown Recurring 10.0

Polymer trial - central bank Incorporation of covert materials in polymer bank notes- final trail commenced Medium Recurring 1.0 7.8

Other

Packaging Development complete - awaiting final procurement decision from client Medium Recurring 2.0 13.7

Single note acceptor Development at request of central bank - first trails commenced Medium Recurring 2.0 13.7

[protean] 27/9/2013 09:26

So the April note from WH Ireland had a buy rating and a target price of 53p with a medium term target of 66p.

It concluded:

"Our FY 2013 estimates anticipate a flattish result ahead of an anticipated ramp up in hardware and materials in FY 2014. That said, Spectra's development pipeline
continues to evolve which may yet yield upside to our core estimates. We retain our Buy recommendation and 53p base price target price."

Is there a note which accompanies today's result Glasshalfull? If so would it be possible for you to send me a copy?

[protean] 27/9/2013 09:18

stewy_18 - thanks for the broker notes. Much appreciated.

[battlebus2] 27/9/2013 08:05

Yep it's all about H2 and going forward from then, this company is on the move at a slow pace but will soon be sprinting. Strong buy IMV.

[protean] 27/9/2013 08:04

Thanks for that GHF. I didn't know there were any broker recommendations and targets.

[glasshalfull] 27/9/2013 08:02

WH Ireland indicate that the company has good visibility for H2 & retain buy recommendation and 53p price target.

Regards,
GHF