Image Systems

Research note


Image Systems: Leveraging on their well-implemented distribution network

Earlier this afternoon, Image Systems entered a partnership together with the Singaporean company MicroVec to sell MicroVec’s PIV-systems (Particle Image Velocimetry) globally. In our initiating coverage report, we mentioned that Image Systems has, especially in the business area of Motion Analysis, a well-established distribution network which implies that the company easily can integrate new products to spurs sales. We see the partnership with MicroVec as a very positive since Image Systems does not offer any PIV-systems, while it also highlights the importance of Image Systems’ global distribution network.

Adding products to spurs sales in Motion Analysis

In the initiating coverage report, we mentioned that in order for the Image Systems to increase sales in Motion Analysis, the company need to add products to its product portfolio. We further believe that the partnership with MicroVec as being very rational as Image Systems does not offer any PIV systems. Now, Image Systems in the business area of Motion Analysis, will provide own systems in DIC, TEMA, TrackEye, while distributing PIV-systems. Image Systems will thereby become a more well-rounded supplier of non-contactless measurement systems. Making Image Systems more of a one way stop within the niche market of video measuring systems.

Also important to mention is that PIV is quite similar to DIC. One can say that the primary differentiator between PIV and DIC is that PIV also includes laser-scanners. This makes it easy for Image Systems to educate their partners for a more efficient global roll-out. The gross margin for selling PIV-systems is much lower than the current gross margin in Motion Analysis of around 90-99 %. We have, however, already accounted for lower gross margin in Motion Analysis going forward.

Further, we believe that today’s news confirms our belief that Image Systems can easily implement other products to become a distributor for companies which do not hold the necessary distribution network. We see this as highly important as many of the players acting on the niche market struggles in finding the right partner for an efficient roll-out. To accomplish an efficient roll-out the partners need to have the technical expertise while standing out in the highly fragmented market of video measuring systems. All of this goes in line with Image Systems' role in the partnership together with MicroVec. MicroVec already has a well-implemented distribution network in Asia, but do not hold the contacts required for an efficient global roll-out.

All things considered, we see today’s news as being very positive as Image Systems has added a new product area within Motion Analysis while it also confirms Image Systems strong distribution network. We further believe that today’s news goes well in hand with our estimates and will therefore not make any adjustments. The base case of SEK 2.85 per share remains, upside potential from the current trading price of around 33 %.

About PIV and the offering

PIV can be explained as an optical method of flow visualization of air or fluids, by the use of cameras and laser-equipment. PIV is mostly used in cars- and aerospace industry where they can measure aerodynamics and emissions. In our initiating coverage report, we mentioned the German company LaVision (SEK 120-150m revenue) who has an evident focus on PIV-systems and especially towards selling systems towards the automotive industry.   

The price of a PIV-systems is depending on the hardware the client chooses to implement. As stated on Image Systems webpage, the entry-level systems of PIV will be priced at a range of EUR 24.9-34.9k while more advanced systems will be priced at around EUR 1m and higher.  

About MicroVec

MicroVec offers complete Particle Image Velocimetry (PIV), Particle Tracking Velocimetry (PTV), Digital Image Correlation (DIC) and Laser Doppler Velocimetry systems. PIV, PTV and DIC systems are designed by Microvec own R&D in Beijing MicroVec Ltd. as well as by PIVTEC GmbH from Germany. LDV systems come from Measurement Science Enterprise Inc. from Pasadena, California. For over 15 years MicroVec has been successful in delivering PIV, PTV, DIC and LDV systems to over 200 entities worldwide including USA, Australia, New Zealand, Switzerland, Poland, Singapore, Korea, China, India, Malaysia, Indonesia, Pakistan, United Arab Emirates etc. with innovative and patented techniques and increased level of sophistication and complexity, including newest techniques like Pressure PIV, Tomographic PIV, Light Field PIV and Single Pixel PIV.

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