Research note


CybAero: mixed news instead of Christmas present

Many investors were still hoping for a Christmas present from CybAero in the form of successful factory acceptance tests conducted for the China customs delivery. Santa Clause didn’t please investors this time though, and the last days of December brought mixed news.

On Dec 30, 2015, the day of the firm’s extraordinary general meeting, it was announced that the China customs delivery (3 units, revenue already recognized) is delayed further, now expected in “early 2016”.

According to the info released by the firm, this is due to ongoing discussions with the client regarding additional requirements the client had. We see a signaling effect and short-term stock catalyst in a successful delivery and payment from the Chinese customs order, since it will prove the firm’s ability to execute (although with delays) fully on a bigger order in its currently most important market. For now, the additional delay in this delivery does not only mean the firm still keeps a big receivable in its balance sheet, but also reduces revenues for 2015, since the firm had to reduce its production for the AVIC order compared to earlier plans. We already adjusted our revenue forecasts due to the Chinese customs delay earlier in 2015, but given the firm’s press release in December, it might well be that their 2015 revenues come in even lower than our current estimate of 64 mSEK.


On a more positive note, CybAero’s extraordinary general meeting approved a directed issue to US shareholder Subversive Capital, including two board seats. We see this as a positive signal for two main reasons. Firstly, the new shareholder and its representatives could potentially contribute with contacts in the US, which has historically been the world’s most important market for UAVs. Michael Auerbach from Subversive Capital is also working with Albright Stonebridge Group, a commercial diplomacy consulting firm that CybAero signed a strategic agreement with in fall 2015 – although the specifics around this agreement have not been announced, as we commented earlier. Secondly, the new international and financially oriented investor representatives to the board will likely be a good complement to the existing, industry-heavy board composition.


The board composition has furthermore changed with the nomination of Anna Öhrwall-Rönnbäck, previously vice chairman, as the new chairman of the board. Previous chairman Claes Drougge, who is also a co-owner of ACC, CybAero’s distribution partner in China, will remain in the board.


Finally, December also brought news from two of CybAero’s competitors in the small UAV class. SAAB and Switzerland based UMS Aero Group announced the formation of a joint venture that will take over the commercialization of Saab’s Skeldar platform. The joint venture will be able to market a range of 4 UAV systems from 20-250 kg MTOW. The biggest helicopter is based on an older version of CybAero’s UAV system, and also UMS' own VTOL UAV system R-350 is in the size clas off CybAero's APID ONE. The new firm will have 55 employees based in Switzerland and Sweden (Linköping). It is therefore likely that the joint venture called UMS Skeldar will compete with CybAero in a number of future sales opportunities, across all key customer segments.

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