DroneShield IPO Set for Take Off?
DroneShield is an Australian technology company focused on developing hardware and software for acoustic detection of drones.
In 2015 approximately one million commercial drones were sold and the market was estimated at US$7 billion. Drones are unmanned aerial vehicles which may be remotely controlled or fly autonomously through software. Most analysts project double-digit percentage growth for the drone industry and while governments use drones for defence and security, they also pose a threat to privacy, physical security and public safety.
The coming IPO of DroneShield Limited offers investors speculative exposure to demand for drone orientated security systems. DroneShield is an Australian technology company focused on developing hardware and software for acoustic detection of drones.
Procurement of patent protection in February 2016 allows DroneShield to accelerate sales and marketing efforts, which to date have focused on pilot testing. The company has trialled and sold ~200 sensor units to date and there is only a limited number of drone detection solutions available on the market.
However, Droneshield has a limited operating history and is reliant on external capital. There is no guarantee that sufficient demand exists for its product to enable the company to become self funding or generate a positive shareholder return. Furthermore, option issuance alongside the IPO may impair early trade in its shares.
DroneShield’s patent portfolio in the US, early interest for its product and ‘first-mover’ advantage are attractive qualities of the IPO. Risks surround its ongoing funding requirement, lack of revenue visibility, and need to validate the commercial potential of its technology. Having secured a few high profile clients such as the Boston Marathon or NATO militaries, DroneShield may attract further interest in a market that is projected to grow at double-digit rates. Investors may be enticed by a one for one option issue alongside the offer, exercisable at 22c in two years, however a medium to long term speculative appetite is required.
Details of the IPO
Company: DroneShield Limited
ASX Code: DRO
Shares on Offer: 35m
Listing Price: $0.20
Market Capitalisation: $27m
Listing Date: June 13
This publication appeared first on The Australian.
Author: Simon Herrmann
May 24, 2016
Simon is a financial analyst at independent research firm Wise-owl specialised in small-mid cap growth opportunities and ethical investment opportunities. Simon's aim is to disrupt the cliché approach to investment decision making as he believes that socially and environmentally responsible behaviour is a necessity to long-term wealth creation. Simon has a deep fundamental understanding of the global financial landscape and has compiled 300+ research reports, valuations and corporate appraisals. Simon is commonly featured in major media outlets and his research is published weekly in The Australian.