SINGAPORE (Apr 27): NRA Capital says Addvalue Technologies is likely to rake in some US$10 million ($13.3 million) in revenue from its first major commercial Inter-Satellite Data Relay System (IDRS) contract win earlier this week.

Addvalue on Wednesday announced it won a contract with a satellite service provider for the customised design and supply of IDRS terminals, which are to be installed on the customer’s fleet of Low Earth Orbiting (LEO) satellites.

See: Addvalue Tech announces first major commercial IDRS contract win

While the group did not disclose the value of the contract, NRA analyst Liu Jinshu estimates the hardware contract to bring in revenue of US$10 million in FY19-20.

In addition, Liu says Addvalue is currently finalising an airtime agreement with the customer, possibly in conjunction with Inmarsat, which will raise Addvalue’s visibility.

“Assuming 2GB of data consumption per satellite per month, the potential airtime charges could work out to about US$0.5 million per month, or US$6 million per year for 50 satellites,” Liu says in an unrated report on Wednesday.

Meanwhile, he says the group’s 4Q18 and FY19 outlook remain positive.

“The company expects 4Q18 revenue to be higher than that of any of the first three financial quarters of FY18 and the inaugural IDRS contracts will help to drive growth for the financial year ending in March 2019,” Liu adds.

The analyst estimates Addvalue to be worth a fair value of 7.9 cents per share, implying an upside of more than 90% from its current share price.

Liu says this “is reasonable, given the contract win and Addvalue’s status as the sole IDRS provider today”.

As at 3.32pm, shares of Addvalue are trading flat at 4 cents.