SINGAPORE (June 8): NRA Capital is recommending investors to take a look at Addvalue Technologies, which has just announced a collaboration with INVAP, the manufacturer of low earth orbit (LEO) and geostationary (GEO) satellites.

With INVAP’s help, Addvalue expects to produce innovative high reliability communications equipment certified for commercial use in space.

Addvalue will also send a team of engineers to INVAP in Argentina for training to augment its manufacturing expertise later this month.

“This will contribute to the enhanced reliability required of communications equipment suitable for use on LEO satellites including our Inter-Satellite Data Relay System (IDRS),” says Dr Colin Chan Kum Lok, Chairman and CEO of Addvalue.

In February, Addvalue signed an MoU with Inmarsat, the UK-listed satellite telecommunications company, to provide the world’s first 24/7 inter-satellite linking services.

(See: Addvalue Tech sets up $13.1 mil war chest for satellite services)

(See also: Addvalue Technologies says Inter-Satellite Data Relay System working fine in space)

In a Thursday report, NRA analyst Liu Jinshu says the collaboration with INVAP means Addvalue will have to finalise its airtime distribution agreement with Inmarsat quickly as interest in the IDRS grows.

For FY17 ended March, Addvalue’s revenue grew by 9% to US$10.8 million ($14.9 million). Net losses shrank by 26% to US$3.5 million.

EBITDA has also turned positive, from negative US$0.7 million to a positive US$0.3 million in FY17. In May, Addvalue announced that it has received a trial order of US$1 million and is in discussion for a further US$3.5 million of orders for its iFleetOne.

“If these discussions are successful, a solid revenue base would have been created to justify FY18 expectations,” says Liu.

Currently, Addvalue trades at 6.7x FY17 revenue, which is reasonable as FY17 revenue excludes future contribution from the IDRS. NRA’s potential value of 7.9 cents translates to about 9.3x sales now.

“If Addvalue scales up to just US$20 million of new annual orders from the IDRS within the next one odd year, our potential value works out to only 3.4x prospective sales,” adds Liu.

Addvalue shares are trading flat at 6 cents on Thursday.