Next Hot Segment on ASX- Drone Technology

Technology has been a significant catalyst for bringing changes in the contemporary world, with advancement at an unmatchable pace Time and again, technological breakthroughs have provided promising innovative solutions during the most pressing challenges, along with a substantial amount of risk.

There is an alarming need to keep abreast with the latest technologies and develop innovative technologies which focus on reducing costs, saving natural resources, enhancing the value of the products and processes, protecting the environment, and improving the quality of life.

One of the breakthroughs in the technology space has been the development of drones. The excitable technology of drones has already made its mark in several industries, like journalism, cinematography, policing and emergency services, agriculture, mining, scientific research and much more.

Australia’ drone industry

Australia’s drone industry is proliferating, and there has been an increase in the number of consumers buying and using drones. Drones are successfully filling the void created due to the jobs that could not be performed earlier while reducing the costs and risks of many difficult, dirty, dangerous or dull jobs.

According to The Australian Trade and Investment Commission (Austrade), the global commercial market in unmanned aerial systems (UAS) is forecasted to expand from USD 4.01 billion to USD 5.04 billion between 2015 and 2022.

Besides Asia-Pacific at the core of such expansion, the expectation that regional revenues would outdo North American revenues by 2022 would place Australia to derive benefits.

According to Austrade:

“Currently, Australia is a host to more than 1200 drone operators who are speedily developing technologies and services that favour the bigger drone ecosystem”

Australia is a growing base for a critical component of the advancement of unmanned commercial applications, namely, Beyond Visual Line Of Sight (BVLOS) testing.

The 2018 Congress of the World of Drones Congress focused on the snowballing business applications of drones; while also examined laws and regulation concerning the use of drones, and future employment opportunities.

The set-up of Sunbirds’ (French solar-powered drone manufacturer) drone technology operations in Australia, provides enough validation to the vast agricultural properties and progressive regulations in the country.

According to Austrade, Sunbirds looks to expand its business into Southeast Asia by catalysing Australia’s proximity and cultural ties with several Asian countries.

The Australian drone industry awaits international opportunities in the light of below-mentioned facts,

  • Japan’s National Space Agency– JAXA – has repeatedly sought Australian involvement in the recovery of its exploratory space missions and views Australia as an attractive destination to test and recover various aerospace systems;
  • Japan is increasingly looking overseas for innovative and cost-effective commercial technologies in space-based situational awareness, autonomous systems (e.g. drones);

Let us now unwind the financial and operational performance of few ASX companies that are engaged in drone business.

Mobilicom Limited (ASX: MOB)

A high-tech player on the ASX, Mobilicom Limited engages in designing, development and delivery of communication solutions for remote mobile private networks and mission-critical ones, capable of operating without any infrastructure.

Mobilicom has two business entities, namely Mobilicom’s core business entity and SkyHopper business entity.

Recently, Mobilicom made significant progress in its operations as well as financials:

  • Mobilicom received repeat order exceeding $200,000 from various units within Israel MOD, including Navy and Army;
  • With this order, Mobilicom’s breakthrough Commercial Drone Upgrade Solution has exceeded its goal of $1 million in orders in 2019;
  • Cash receipts for Q3 2019 (quarter ending 30 September 2019) totalled $1,098,000, up 33% from Q3 2018;
  • Cash receipts from customers for Q3 2019 totalled $975,000, up 49% from Q3 2018;
  • Mobilicom has a strong cash balance of $5,743,000;
  • Mobilicom has a backlog of orders exceeding $700,000, up 100% from Q2 2019;

Mobilicom is the exclusive supplier of the Commercial Drone Upgrade Solution to the Israel MOD, and the new purchase order shows a continued interest in the Mobilicom solution.

MOB stock has provided 10.00% return in the past one month, as on 13 November 2019. The stock was noted trading at a price of $ 0.110 as on 15 November 2019.

ParaZero Limited (ASX: PRZ)

Aiming to enable the comprehensive drone industry to realise its ultimate potential, ParaZero offers intuitive and smart solutions for consumer and commercial drone markets. It designs, develops and provides top-notch autonomous safety systems.

Key highlights from PRZ’s operational and financial progress are as follows:

  • Cash receipts for the Q3 ending 30 September 2019 reached a record of US$414,000;
  • 38 companies secured waivers for the ParaZero SafeAir System;
  • ParaZero is advancing projects to secure approvals in Europe and other countries;
  • Following the completion of the quarter, PRZ secured an additional USD 440,000 via a private placement;

PRZ stock has provided 20.00% return in the past three months, as on 13 November 2019. The stock was noted trading at a price of $ 0.060 as on 15 November 2019.

DroneShield Ltd (ASX: DRO)

Being a worldwide pioneer in drone security technology, DroneShield has presence in the USA, UK and Australia. Through the combination of top-notch expertise in engineering and physics and intense experience in defence and intelligence, DRO has devised a pre-eminent drone security solution.

In the period ended 30 September 2019:

  • DRO raised $9,550,000 in new capital, from a substantially institutional investor base, transforming, expanding and further institutionalising its share register, market capitalisation and market liquidity, and securing its capital base for a long-term runway;
  • DRO’s cash inflows from customers were $333,779 for the quarter;
  • DRO ended the quarter with approximately $3,000,000 worth of orders that have been placed by the Company’s customers;
  • Approximately $200,000 of the cash inflows during the quarter related to a new order placed by the Ministry of Defence of a large Middle Eastern country for which drone defence has recently become a critical national security issue;
  • The Australian Department of Defence placed the first substantial order with DroneShield – for its recently released RfPatrolTM product, in the amount of $700,000;
  • The Company continued to progress multiple substantial contracts globally, with a key potential bid for an order in the amount of $60 – $70 million having progressed from the preferred bidder status to a negotiated form of agreement.

DRO stock has provided 8.96% return in the past one month, as on 14 November 2019. The stock was noted trading at a price of $ 0.325 on 15 November 2019.

Department 13 International Limited (ASX: D13)

D13 is primarily engaged in fuelling the transformation of the networking and communication fields as well as current applications in drone defence, mobile phone IT security and secure enhanced Android phone systems.

The application of proprietary innovative advanced technology to emerging requirements by its founders (a team of former military operators, scientists and engineers), D13 is engaged with multiple counter UAS projects to provide strategic solutions for civil, military and commercial security requirements.

Recently:

  • D13 secured a credit facility totalling $10 million, enabling the Company to fund its ongoing operations for the foreseeable future;
  • Developed a new business segment, Single Carrier – Frequency Division Multiple Access (“SC-FDMA”), centred around battery optimization for wireless communication and devices, which will result in a prototype for demonstration in 2H FY19;
  • Advanced the strategy for additional licensing opportunities for D13’s broader IP portfolio.

Bottomline

Drone technology has an ever-accelerating demand with its wide applications into business and daily life. The above-discussed stocks have shown fair financial as well as operational results validating the growth in drone industry.

With more than 80 foreign locations, Austrade is increasingly participative in the commercial and defence UAS sectors and assists Australian businesses to penetrate fresh markets, recognize and engage in export opportunities, and work with a regional partner. Australia is emerging as a base for the next generation of technologies, expected to transform the agriculture and food sectors.


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