HCL HighCom Limited (Prev XTEK Ltd (XTE)

[percy]

I've done surprisingly well trading this micro cap despite being an illiquid stock. Never pushing big volumes to wipe out whole lines just nibbling along the line. Have recently topped up at 26c and 38c to ride a little wave after it's recent big contract wins and good annual result announcement.

Revenue more than doubled
Gross margin increased to 47%
NPAT of $8.2m

Reasons why I will hold for the foreseeable future:
Company will announce capital management strategy as they have lots of cash
They will pay down all debt in 2023
25m of tax losses not yet realized
Increased spending on defense by Australia, Japan, Europe etc
77% of 2022 revenue ($45m) already booked in orders for 2023
Pipeline of leads worth over $100m

All that for a MC of $41m (at 40.5c). Yes this won't trade at standard PE multiples as it doesn't really have recurring revenue streams but with prudent capital management and big contract wins there are some nice gains to be made in my view.

I bought in today at 40.5 cps.
Exciting business .

[silu]

I bought in today at 40.5 cps.
Exciting business .

Good timing. Wiped out some lines and popped nicely up to 45c this morning.

[percy]

From Stockhead.

Xtek (ASX:XTE) started off in the game of drones, supplying and servicing unmanned aerial vehicles to the military.

But the company’s real oomph comes via an acquired Ohio-based enterprise that develops and sells high strength, lightweight body armour and ballistic helmets to defence and police forces.

Xtek reported a doubling of revenue to $58.2 million, with a $5.7 million reported profit compared with a previous $4m loss. The order book stands at $45 million.

The clincher is that Xtek has a net cash balance of $34.6 million and its market cap hovers around $39m. With an imminent outbreak of peace unlikely, that’s a lot of bang.

[DarkHorse]

The FY22 $5.7m reported profit ($8.2m excluding non-cash impairment) includes HY1 loss of $6.8m (-$4.3m excl impairment).

So by my calculation that's a HY2 NPAT of $11.9m! Order book suggests next HY will be similar.

Totally new management team lead by Scott Basham (who owns 250K shares), same guy who did wonders with AVA, which stripped away unprofitable products/services to focus on body armour as Percy mentioned. I highly recommend the Eureka Report interview here,https://www.xtek.net/news-and-media. Billion $ TAM.

Conclusion:
1. Business prospects
2. Management
3. Valuation

I bought heaps last week as a long term investment.

[percy]

https://cdn-api.markitdigital.com/ap...df02a206a39ff4

[silu]

Looking good at the moment. XTE's performance has made sure that my portfolio has gone up in value over the last 2 months which ain't too bad in this climate. Serious re-rate could happen in an instant should we get another large order. Let's not forget that many countries have sent body armour and helmets to the Ukraine so their own stock pile needs replenishing at some stage (incl NZ).

[percy]

Going from today's agm presentation XTE looks to be going ballistically.
https://cdn-api.markitdigital.com/ap...df02a206a39ff4

[Sideshow Bob]

Going from today's agm presentation XTE looks to be going ballistically.
https://cdn-api.markitdigital.com/ap...df02a206a39ff4

Bought an XS parcel a few months ago.

Going well. Closed at $0.60 Friday, $0.36 of cash per share in the bank, with strong orders going forward.

I especially like this part: "We appear well on track to another record set of stellar full year results".

[silu]

Bulletproof vests save lives
FirHbEDVEAAO-n-.jpg

[silu]

Nice XTEK Receives Defence A$26.9m New SUAS Order
http://research.iress.com.au/IDS/old...091850000&ppv=

It's not high-margin product but we do make good money on service and spare parts.