Saferoads Holdings’ stock crashed over 8% in a day-trade after the company downgraded its Fiscal 2019 guidance in a market announcement released on Wednesday, 29 May 2019.
The information technology company Saferoads Holdings Limited (ASX: SRH) announced that the company now forecasts its total revenue for Fiscal 2019 likely to be less than Fiscal 2018. The lower guidance is reportedly due to customer deferrals within the company’s domestic product sales as well as project delays, resulting in reduced sales volume in comparison to the previous financial year.
The guidance expects Saferoads to generate a breakeven profit position before tax for the FY2019 year, depending upon the timing of customer orders and delivery requirements. This is in comparison to the previously advised profit range of $150k to $400k.
However, the company confirmed its forecast sales to remain strong and therefore, expected to be 50% above than the last year. The company continues to invest in various business development initiatives to boost the company’s revenue and to better promote its sales and services and contain costs. It believes that these initiatives would form a vital component needed for the commercialisation of SRH’s new products, particularly in its target US and NZ markets, to provide returns for the medium to long term.
The company further expressed its confidence that it has an efficient platform to deliver better returns in FY2020, both domestically and overseas. SRH’s new product programs that have been ramped up over the last few years will provide a growth platform for the coming years.
Saferoads has recently secured the first order of its new HV2TM temporary barrier system to a major equipment hire company in New Zealand, for delivery in July 2019. The company expects further Australian approval towards the end of the calendar year.
A snapshot of SRH Temporary Barriers (Source: Company’s Announcement)
CEO Mr Darren Hotchkin stated that “This initial sale of a new product is a critical milestone for the company in introducing the first free-standing TL-4 MASH tested temporary barrier system in the world. This is the start of the commercialisation stage of this new product, which is progressing well with regulatory approvals in five US states and also, more recently, the province of Ontario in Canada.”
As per the recent market update, Saferoads has achieved approval for its HV2 TM Barrier in five US states, reflecting the significant success in the task of obtaining the required USA State approvals. The company stated that “it is winning support from established industry partners and is getting closer to formal sales and marketing agreements for the HV2 TM Barrier and the Omni-Stop TM Bollard range.”
The group witnessed decent progress in its equipment rental offering and therefore, it continues to invest in more rental assets to meet market demand by utilising debt to finance these new assets.
SRH stock last traded at $0.210, down 8.696%, on 29 May 2019. It closed at a price to earnings multiple of 9.790x with a market capitalisation of $8.37 million. Over the past 12 months, SRH stock price has increased by 21.05% despite a plunge of 36.11% recorded in the past three months.
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