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Last week, shares in CyanConnode (LON:CYAN), the AIM-listed smart technology company jumped around 40% to around £13 on the news that the company had raised just over £3 million.

With further commitment from current investors as well as new investors onboard, this round of fundraising, according to John Cronin, CyanConnode’s executive chairman, will strengthen the balance sheet, increase working capital, fund future growth and take advantage of significant growth opportunities.

Cronin is right when it comes to opportunities in the market and the jump in the CyanConnode share price could reflect this. With utility companies often losing as much as 20% of revenue from theft of power and unpaid power bills – this is particularly prevalent in emerging economies – many companies are adopting advanced metering infrastructure systems to capture information and identify leakages.

The nuts and bolts of CyanConnode technology

CyanConnode designs and develops narrowband radio frequency mesh networks. This machine to machine (M2M) connectivity is needed by meter manufacturers and systems integrators to facilitate the smart metering process. The technology is used in smart electricity, gas and water meters and can be applied to streetlights, heating and electric vehicle charging systems.

The company’s main market is in India – it has been working there since 2009 and its Omnimesh platform, which cost over $50 million to develop, is being used in large-scale utility smart meter rollouts in India, as well as Thailand. The Omnimesh platform is a multi-application platform and can also be used with the Internet of Things (IoT) and in the development of smart cities too. CyanConnode is also part of the UK rollout of smart electricity meters.


High demand for smart meters

During the 12-month period ended March 2021, 481,000 modules were shipped to customers compared to around 115,000 in the 15 months to March 2020. Last year CyanConnode received an order for 350,000 Omnimesh modules worth more than £6 million. Also, a previously delayed Indian contract worth around £10.5 million (INR 1 billion) was resumed with cash being received for the first 40,000 modules.

Market massive but unpredictable

While the orders keep rolling in it is also worth noting that it is an unpredictable market. The availability of silicon is one risk factor but it is also very likely that rollouts of smart meters could be affected by Covid-19 as well as political interruptions.

Nevertheless, smart meter applications are the major revenue drivers for the firm at present. Revenue for the 12-month period to March 2021 was approximately 2.5 times the 15-months to March 2020 of £2.5 million and approximately £5.3 million cash was received from customers during the 12-month period (compared to £4.1 million in the 15-months to March 2020).

Forecast looks good, hopes for profitability

In the last couple of months Cyanconnode has signed a global strategic alliance agreement with California-based Smart Energy Water. SEW is a global energy and water cloud platform provider serving over 300 utilities worldwide.

It has also signed an MOU with Intellismart, an India-based smart meter asset provider. This is a joint venture company formed by Energy Efficiency Services Limited (EESL) and the National Investment and Infrastructure Fund. It has also been engaged by EESL Energy Solutions, Dubai, as technology partner for smart metering and smart lighting projects in the Middle East and Africa.

CyanConnode is ramping up production to meet demand and has forecasted strong revenue growth of around 250% to £6.4 million during the 15-month period to end-March 2020, rising to £8.83 million in 2022. All being well, it should, it expects, turn a profit in 2023.

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Please note this article does not constitute investment advice. Investors are encouraged to do their own research beforehand or consult a professional advisor.

Philippa Aylmer

Philippa Aylmer

Philippa Aylmer is a freelance writer within the investment management sector.

She began her career in the late 90s writing about emerging markets for the Euromoney titles while based in Pakistan. Since then, she has covered hedge funds, ETFs, wealth management and fintech.

As well as news, on the client side, Philippa advises on media relations and editorial strategy, writing about the topical and technical issues of investment management

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