HCL HighCom Limited (Prev XTEK Ltd (XTE)

**Sideshow Bob** · 03-10-2023, 12:50 PM

Originally Posted by silu

Good start to the day
https://stocknessmonster.com/announc....asx-3A627453/

XTEK Secures New Multi-Year SUAS Support Contract with Department of Defence of up to $110m Over 10 Years

Nice!! Market likes it and is up 11% in the 1st hour.

**Rawz** · 03-10-2023, 12:51 PM

Originally Posted by silu

Good start to the day
https://stocknessmonster.com/announc....asx-3A627453/

XTEK Secures New Multi-Year SUAS Support Contract with Department of Defence of up to $110m Over 10 Years

Yes excellent. SP up 10%
Potentially Regal finished selling (surely!!!) so this can get to fair value which is closer to $1 imo. All it will take is a new uptrend supported by new contract win announcements which hopefully isnt out of the equation considering they said they have a $300m pipeline was it!?

**percy** · 03-10-2023, 01:44 PM

Excellent contract win.
Just when it looked certain we had XTE wrong,it turns out we have it right...lol

**Sideshow Bob** · 03-10-2023, 02:05 PM

Originally Posted by percy

Excellent contract win.
Just when it looked certain we had XTE wrong,it turns out we have it right...lol

One swallow doesn't quite make a summer......

But a nice start.

Anyway, I didn't think you got them wrong Percy??!

**Rawz** · 05-10-2023, 01:06 PM

XTEK has been running strongly since the last big contract win. Im now back in the green yay.

MST Access new report out: https://www.xtek.net/wp-content/uplo...-04-Oct-23.pdf

Wins add credibility to pipeline

NEED TO KNOW
− XTEK has announced that it has been awarded a 10-year $110m support contract for the small unmanned aerial systems (SUAS) it has just finished delivering to Australian Defence.
− It has also announced some small ballistics orders for international customers– important reference sites.
− These contract awards increase credibility associated with XTEK’s $375m pipeline.

XTEK has announced that it has been awarded the services and spare parts contract for the $27m SUAS order announced in Dec-22. An initial 4-year contract with 3, 2-year extensions includes services and spares and totals ~$110m. We estimate that this contract will generate gross margins of ~30%.

XTEK’s US-based Highcom business (Ballistics division) has announced the completion of one ($2.6m), and award of another ($3.2m) small personnel protection contracts with unnamed international customers.

The $375m weighted pipeline is difficult to reference given the lack of historical pipeline conversion rates. These announcements build credibility around the efficacy of the pipeline

Valuation
Our forecasts and valuation remain unchanged from our previously published report in September. We estimate a 12-month forward value for XTEK based on capitalising FY25 EBITDA at a discounted market multiple. Our valuation is $0.73 per share with upside to forecasts and valuation will come as the Company proves up pipeline conversion. It is worth noting that cash at bank at 30 June 2023 ($7m) added to the estimated $10m of surplus inventory (that management expect could be released by 31 Dec 2023) approximately equals half the market cap. And adding this to the ~$20m of value from the SUAS support contract ($2m NPAT p.a capitalised at 10x) gives a value similar to the current market cap.

**Sideshow Bob** · 05-10-2023, 03:13 PM

As someone said, if only the broker valuations always came true......

**Rawz** · 05-10-2023, 03:56 PM

Originally Posted by Sideshow Bob

As someone said, if only the broker valuations always came true......

Yes true. and that is paid research so need to keep that in mind.

But none the less the current P/E is 6 and the main point the report was saying is their much talked about $300m+ pipeline has more credibility if you like.
At valuation of $0.73 is still going to be trading on low double digits P/E. Not an unfair valuation imo.

**Sideshow Bob** · 05-10-2023, 04:01 PM

Originally Posted by Rawz

Yes true. and that is paid research so need to keep that in mind.

But none the less the current P/E is 6 and the main point the report was saying is their much talked about $300m+ pipeline has more credibility if you like.
At valuation of $0.73 is still going to be trading on low double digits P/E. Not an unfair valuation imo.

Thanks Rawz.

More a commentary on brokers and their valuations rather than XTEK and their prospects. Noted paid research......