CyanConnode: Further contract award in Thailand

CyanConnode Holdings plc (LON:CYAN) has announced a significant additional order in Thailand, securing a follow-on order for 31,000 smart meter modules and gateways. Substantial further orders are expected in Thailand, where the end customer is the second-largest state-owned utility company. Recent news flow from CyanConnode has been strong, including a heavily over-subscribed £3m fundraising in June 2021 and a major MOU with Intellismart, a key entity in the Indian smart meter deployment programme. Our DCF-based implied equity fair value for CyanConnode is £84.3m (£0.38 per share).

  • Significant order secured: The Thailand order is from JST Group, a distributor procuring for deployment at the Metropolitan Electricity Authority (MEA). This is a state-owned utility with ca.4m energy customers across three major provinces, namely Bangkok, Nonthaburi and Samut Prakan.
  • Path to further orders: This latest order takes the total number of modules ordered by the MEA in Thailand to 64,000, plus associated gateways. The head-end software capacity for meter connections already purchased by the MEA is 240,000, implying a path to orders for a further 176,000 modules in this phase.
  • MEA project comprises a Smart Metro Grid Platform: This is based on CyanConnode’s highly scalable Omnimesh platform, which offers a high level of redundancy due to its mesh configuration avoiding single points of failure. The platform also allows RF Mesh and cellular connectivity, addressing all scenarios.
  • Incremental opportunities: Alongside the MEA, Thailand’s other main utility is the Provincial Electricity Authority (PEA), which has a much a larger customer base across 74 provinces, representing ca.22m households. Based on the successful MEA rollout, this is a strong opportunity for CyanConnode.
  • Investment summary: Our FY’22 revenue estimate of £8.8m is largely based on existing contracts. The MOU with Intellismart in India that was announced in May and ongoing discussions for new contracts in several markets together confirm a strong pipeline for new orders that will contribute to revenue in FY’22E and beyond. Our DCF-implied equity fair value is £84.3m compared with the current market capitalisation of £24.7m.

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