Edison Investment Research projects more contract wins for Seeing Machines, profitability in 2010

Edison Investment Research foresees a “much stronger” second half for Seeing Machines (AIM: SEE) with a return to profitability this year and “healthy” revenues increases in 2011 and 2012 after the developer of vision based industrial systems won contracts from mining majors and raised £3.3 million to accelerate the sale of its core product DSS.
Despite the success in the mining market, Edison said that while it should be the company’s immediate focus, the automotive market may reopen and provide SM with opportunities for its products that utilize the same core technology.
The company finalised a deal with Freeport McMoRan (FMCG, NYSE: FCX), its first in the resources sector, and then announced that it was supplying DSS at Freeport’s Grasberg mine in Indonesia and then the Safford mine in Arizona. SM has also been able to win contracts from BHP Billiton’s (LSE: BLT) Energy Coal business unit.
Edison said that whilst SM has been selling DSS to the mining industry for several years, these contracts marked the endorsement of DSS as a serious application for accident reduction within the mining industry.
It forecasts more contract wins in the second half, which should drive the company to profitability in the current year, noting that SM stated that it was well advanced in negotiations for a number of other DSS deals.
“There could yet be more positive surprises,” concluded Edison.
Interim revenues at Seeing Machines were 18% lower at A$2.3 million and the group slipped to a A$0.4 million loss. However, Edison said that excluding development costs and foreign exchange losses, it was a significantly improved performance, while free cash outflow contracted to A$110k.
Shares in Seeing Machines rallied 6% today.

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