CyanConnode Holdings Plc (LON:CYAN), a prominent player in the telecommunications equipment sector, has recently embarked on a strategic journey to bolster its financial footing and expand its market presence. The company’s recent capital raise, amounting to £2.72 million of gross equity, marks a pivotal step in its quest for growth and innovation.
The company’s move is primarily fueled by the evolving demands of Advanced Metering Infrastructure Service Providers (AMISP), who are diversifying their smart meter sourcing. This shift necessitates increased Research and Development (R&D) investment from CyanConnode to stay competitive and meet the emerging market needs. Specifically, the company is focusing on enhancing its offerings, such as developing the Gateway 7—a dual sim IPv6 gateway—and complying with the WiSun interoperability standard, soon to become a mandatory industry requirement.
CyanConnode’s R&D initiatives are not just about keeping pace with industry standards but also about differentiating itself in a competitive market. The development of a Unified Head End System (UHES) stands out as a significant innovation. This system enables the platform to connect via various mediums like RF, cellular Narrowband Internet of Things (NB-IoT), and Power Line Communication, thus extending its utility to gas, water, street lighting, and EV Charging networks.
Analyst Bob Liao recently wrote “The Group’s growth opportunities remain very strong, leading us to leave our revenue growth forecasts of 39% in FY24 and 111% in FY25 unchanged. However, because not all additional R&D is capitalised, we lower underlying EBIT by £1.5m to -£1.3m in FY24 and by £1.2m to £3.9m in FY25. We believe the shares remain undervalued at 10.5x EV/ EBIT FY25.”
