Could you tell us a bit about yourself and your background?
I have a long experience in telecom / satellite communication, and I have always worked in a high-tech environment in business leadership and executive positions. I am an engineer by education, and I “grew up” and learned my leadership trade in Nokia, where I worked for 20 years. I have lived almost 6 years in Sweden, working both as CEO in an IT service company in the music industry and before I joined ASTG, I was Managing Director (VD) and global Chief Marketing and Sales Officer for an American/Swedish company in the Satellite industry. I love working with people, business and technology, helping people making sense of things, creating strategy and setting direction.
Please give our readers an introduction to ASTG.
ASTG is a technology company operating in two rapidly growing and interconnected niches; satellite communication and inertial measurement systems (called IMU). What these two niches have in common is that they bring stability to a world in motion.
In satellite communication, we have developed a high-tech and stabilizing antenna platform.
Imagine a moving ship at sea, and a satellite 36 000 km above the earth's surface over equator. Exact pointing from the ships satellite antenna dish to the satellite, is essential in order to maintain the connection between the ship and the satellite. The antenna must constantly compensate for the ship's rolling movements on the waves. Our platform is unique in both hard- and software and is particularly durable - for example to be able to handle rough seas with saltwater corrosion or tough treatment, e.g. nearby explosions if it is a naval ship in a hostile situation.
While we have integrated our inertial sensor system in the stabilized antenna platform, the IMU is also a product in its own right, that we market and sell separately. The IMU measures movements in real time through integrated accelerometers and gyro sensors which, in combination with other systems, can be used in everything from driverless vehicles, advanced shock absorber systems or automatic trim planes for boats.
For many years, we have focused on creating as competitive products as possible and with the successful delivery of our antenna systems to a large government customer, we are now ready to take the next steps in growing the company. We see great opportunities in the market going forward.
Could you elaborate on ASTG's business model?
The business model builds on investing in the development of satellite antenna solutions, which will in turn go into serial production. The customer will pay an agreed price per system, covering all components and production cost, plus a margin that contributes to the company’s earnings.
The investments may be paid by the customer for customer specific solutions, but may also be carried by the company, for generic development of new solutions where a market demand is present or possible.
After delivery of antennas to the customers, the company will be able to generate service revenue from Support & Service Level Agreements, and additional revenue from software licensing and maintenance fees.
The business model for IMU’s is similar to the business model for antennas. However, due to the deeper level of integration when the IMU’s are customized for use in a larger system, the customer is more likely to share the cost for development depending on the technical requirements and what order volume the customer is willing to commit to.
We approach the market and our customers both directly, but also through a global network of resellers.
ASTG is currently raising 37,6MSEK in a rights issue. How are you going to use this money?
As mentioned, we see great potential to grow globally in the coming years and we are convinced that we have strong and competitive products enabling us to capture market share. We want to grow in both satellite communication and inertial measurement systems.
While a smaller part of the proceeds will go to turn current short-term debt into equity to reduce our interest rates and payments, we want to invest the majority of the capital in 3 key areas:
* We are now entering a commercialization phase where we are increasing our focus on sales and marketing. We want to increase the number of customer leads and opportunities, to increase the likelihood of orders in both our business units. We need to create a steadier flow of orders.
* A large part of the proceeds from the share emission we will focus on developing additional products and diversifying the product portfolio. Diversification is very important for us to create a stable and ongoing business. This includes further enhancement of our IMU and our Maritime Satellite Antennas, as well as looking at upcoming market opportunities within low orbit satellites and Earth Observation.
* We are also actively looking at potential acquisitions that can strengthen the offering, create synergies, increase competitiveness and help strengthen the market position. The Nordic countries and Sweden in particular have a strong heritage in satellite communication, and my vision is that it is possible to create a new strong globally operating company fulfilling our mission of “Bringing Stability to a World in Motion”.
How does your competition look like and what do you do better/differently than your peers?
We are in a global business and competitors originates in several parts of the world.
For the antenna business we estimate that there only around 8-10 competitors globally that can produce and create an antenna that fulfils the tough requirements that our customers require. Our systems are approved to the highest military standards and we differentiate ourselves by offering a flexible and modular solution, that can compete both in price and performance, compared to our competitors.
For the Inertial Measurement Units, there is a wide range of competitors evolving, due to a rapid growing market driven by more and more automation, robotics and self-driving vehicles. Our unique differentiator is that we have a background from the military industry, and we are adapting state of the art military technology to commercial applications. We have strong design that allows us to customize the solution to fit a specific customer need, and we can work with the customers during their design and development process.
What is the size of ASTG's potential market?
The market for IMU’s is overall $3.5M in 2019, growing with a CAGR of 6% over the next 5 years, according to our sources. Within the so-called industry segment, which includes self-driving vehicles and stabilization of robots, that market is expected to grow with a CAGR of 16% over the next 5 years, with a total volume around $700M in 2019. With the industry segments, there is naturally a large variation of products and applications, but we expect that we can address a large part of that market.
The market for satellite services providers, the ones selling airtime to end-users, the market is growing with around 13% every year over the next 10 years. This in turn is driving the market segment for the so called “ground segment”, which is expected to grow with $69 billion over the next 10 years. ASTG estimates to be able to address around $5 billion of that market in the same period, with further development of the product portfolio.
I also want to mention a new industry trend and market area that has our focus. The trend is Low Orbit Satellites (also called LEO), flying 700 to 1500 km above earth, so much closer than the existing geostationary satellites mentioned earlier.
LEO is the satellite industry's answer to 5G, with high speed and low latency internet, via satellites all over the world. Companies such as Amazon and SpaceX are investing billions of dollars to ship new satellites.
Outside of bringing higher data speed and global coverage, small satellites flying in low orbit is already being used for Earth Observation purposes, i.e. taking pictures of the Earth from space.
The LEO satellites and small satellites are continuously moving across the horizon and require the terminals on earth to track them, which requires the stabilization and tracking capabilities that are ASTG's core strengths.
According to you, why is buying shares in ASTG a good investment?
I will give you four good reasons, that together makes ASTG a good investment.
1) 2019 can most easily be described as a turning point for the company. We are moving from a “development program phase” into a commercialization phase and in Q3 2019, we showed a positive EBITDA for the first time in company history. This in itself is a good trend and directly attributable to orders from a demanding satellite communication customer, an invaluable proof that our product and technology hold the highest quality.
2) Both of our business units, maritime antennas and IMU’s, are operating in growing markets, offering opportunity to increase our business.
3) New trends offer new opportunity for ASTG Technologies & Products. E.g.; “SatCom on the Move for Land”, “Low Orbit Satellite System”, “Earth Observation” and “Motion Sensors in almost every application with movement”.
4) Sweden and the Nordic countries have a wide range of small and mid-size companies, specialized in satellite communication as well as components subsystems for stabilization and satellite communication. We can leverage that heritage into a bigger and stronger, yet innovative and agile company, opening opportunity for capturing more global business.
These 4 points combined with hard work and strong leadership is the recipe for success and the reasons to invest in my mind.
Finally, what is your long-term vision for ASTG? Where do you see the company 5 years from now?
I have a clear vision that by 2025, we have created a new major Nordic company within satellites communications and technologies for stabilization and movement. We have created that company both by leveraging the baseline technology of ASTG, but also by leveraging the Swedish and Nordic heritage in satellite communication, and by bringing together a number of smaller and mid-size companies with high synergies.
As mentioned, our mission is to “Bring Stability to a World in Motion”. I hope we can do just that….
Erbjudandet i sammandrag
Teckningskurs: 2,94 SEK per aktie
Teckningstid: 29 november – 13 december, 2019
Handel med teckningsrätter: 29 november – 11 december, 2019
Emissionsvolym och belopp: 12 807 110 B-aktier och cirka 37,6 MSEK
Teckningsförbindelser och emissionsgarantier: 70% av emissionen omfattas av teckningsförbindelser och emissionsgarantier
Marknadsplats: NGM Nordic MTF