A look at the Drone Technology landscape - DRO, OEC

  • Feb 02, 2020 AEDT
  • Team Kalkine
A look at the Drone Technology landscape - DRO, OEC

The drone is an aerial vehicle system which is unmanned and comprises of two parts i.e., the drone itself as well as the control system. These aerial vehicle systems are fitted with different technologies like infrared cameras, GPS and laser. The controlling system of drones is also known as remote ground control systems (GSC). Drone technology has helped the businesses and government agencies by providing improvement in safety, savings in money as well as more efficient management of facilities, resources, assets, infrastructure as well as land.

When it comes to starting the drone business, it does not possess considerable entry barrier. With a decent knowledge of UAVs (Unmanned Aerial Vehicle), one can start the business with first getting approval form government agencies. Drone technology has opportunities in businesses such as Filmmaking, Photography, Agricultural business etc. In the below article, we would be looking at two ASX-listed companies, which run their businesses in Unmanned Aerial Vehicle systems- DroneShield Limited, which recently received an order from Australian Defence department and another one is Orbital Corporation Limited, which possesses decent set of financial numbers. Let’s deep dive into both the companies with their recent updates:

DroneShield Limited (ASX: DRO)

DroneShield Limited (ASX: DRO) is an Australia based leader in drone security technology. The Company has developed the pre-eminent drone security solution that protects people, organizations and critical infrastructure from intrusion. As per ASX, the market capitalization of the company stood at $56.05 million as on 31st January 2020. The company recently announced that Robert Clisdell has stepped down from the Board of Directors while Jethro Marks has joined the Board. Mr Clisdell would remain as an advisor to the company as deemed appropriate.

Received Payment from Australian Department of Defence

  • In another update, the company announced that payment of around A$300,000 has been received from the Department of Defence in Australian government for of its DroneGun TacticalTM product the order for which was placed by the customer in December 2019 and was delivered by the company in January 2019. The company also added that order follows two earlier orders of Australian Department of Defence for the company’s RfPatrolTM
  • On recent developments, the company in its 2019 EGM stated that it has raised $9,550,000 in the form of new capital in August 2019, from a substantially institutional investor base. This raising of new capital will transform, expand as well as further institutionalize its shareholder register. Also, this provides market liquidity and secures its capital base from a long-term perspective.
  • DRO has received an amount of around $3 million in the form of customer cash receipts and grants for Jan-Sep 2019, against $1.8 million for the entire calendar year 2018.

Certification by UK Government

  • The company through a release dated 5th December 2019 has notified the market that its product DroneSentinelTM which is a multi-sensor counterdrone system has been certified by the UK Government’s Centre for Protection of National Infrastructure or CPNI.
  • It added that DroneSentinelTM has been incorporated in CPNI Catalogue of Security Equipment, also known as CSE.

Financial Performance of DRO

DRO via a release announced its results for September 2019 quarter and highlighted the following:          

  • The company stated that after two prior transformational quarters in 2019, the company has continued to scale up its business in the September 2019 quarter (Q3 FY19).
  • The company experienced the end of quarter orders amounting to around $3,000,000, which has been placed by the customers. The payments for the order are expected to be made by its customers in subsequent quarters.
  • During the quarter, the company raised an amount of $9,550,000 in the form of new capital, from a substantially institutional investor base, which will transform, expand as well as further institutionalize its shareholder register, market capitalization and market liquidity, and secure its capital base from a long-term perspective.
  • DRO entered a watershed partnership with BT, which happens to be the leading telecommunications provider in the UK and launched a suite of counterdrone services nationwide in the UK, with DroneShield as its sole counterdrone provider.
  • DroneShield has continued to progress multiple substantial contracts internationally, with a key potential bid for an order of $60 million - $70 million having progressed from the preferred bidder status to a negotiated form of agreement.

The stock of DRO closed the day’s trading at $0.230 per share on 31st January 2020, indicating a rise of 3.604% against its previous closing price. The company has a market capitalization of $56.05 million as on 31st January 2020. The total outstanding shares of the company stood at 252.46 million. The stock has generated a total return of -38.67% and -25.81% in the time period of three months and six months, respectively.

 

Orbital Corporation Limited (ASX: OEC)

Orbital Corporation Limited (ASX: OEC) is focused on advanced design, established manufacturing processes as well as comprehensive testing for delivering superior in UAV propulsion systems as well as critical components in flight systems.

Decent Improvement in Financials

  • For the first half of financial year 2020, the company reported unaudited preliminary revenue amounting to A$11.4 million. This has been supported by shipments of initial engine model of Orbital UAV with respect to its long-term agreement with a wholly owned subsidiary of The Boeing Company, namely Insitu Inc.
  • The company added that the decent improvement witnessed by OEC during the period has proved as a testimony to the investments, which was made over the previous years in its UAV strategy.
  • When it comes to the financial statistics of FY19, the company reported revenue from continuing operations amounting to $15,253,000 and reported net loss after tax of $5,906,000. This loss was due to a several factors, which include operating costs to attain the required internal capacity expansion at Hood River production facility of Orbital UAV as well as the impairment of receivables from the sale of non-core asset, Remsafe.
  • At the end of FY19, the company possessed a strong balance sheet with cash and receivables of $15,127,000, and net current assets of $13,453,000.
  • The company financed the development of its proprietary Modular Propulsion Solution and invested capital in order to facilitate production capacity expansion in the USA. The company also made further investment in capability improvements as well as working capital to allow full production ramp-up in support of the LTA deliverables.
  • The company also added that FY19 reflects the first year Orbital UAV has operated under the expanded LTA with Insitu Inc. During FY19, Orbital UAV has designed, developed and commenced production of its first MPS propulsion system for Insitu Inc.

In another update, the company announced that it has commenced the shipping of the second engine model with respect to its long-term agreement with Insitu Inc. This has also proved to be another milestone for Orbital UAV, in the delivery of its commitments to Insitu as well as in its long-term focused strategy on UAVs.

On the outlook front, the company is expecting revenue in the range of $25 million-35 million for FY20. The company is on track to attain its production goals and it is committed to provide its customers with the world’s leading UAV propulsion solutions.

The stock of OEC closed the day’s trading at $0.435 per share on 31st January 2020, indicating a rise of 6.098% against its previous closing price. The company has a market capitalization of $31.81 million as on 31st January 2020. The total outstanding shares of the company stood at 77.59 million. The stock has generated a total return of 29.85% and 24.29% in the time period of three months and six months, respectively.


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