WAYS

Waystream Holding

Fundamental View

Waystream is a Swedish company that sells software-based routers and switches for fibre broadband networks. The company’s CEO is Mats Öberg and its chairman is Peter Kopelman. The company has 28 employees and is headquartered in Kista. Its customers are operators and others that deploy fibre networks to users such as metropolitan networks, utilities and service providers.

Two of its activities will play a significant role looking forward – the launch of its new MPC480 platform and international expansion. MPC480 allows Waystream to create a complete offering and expand its customer base to include major players (Tier 2).

Waystream distinguishes itself as a flexible and customer-oriented supplier. Its flexible business model is based on the option of separate software licenses (using the company’s own operating system, iBOS) that add functionality to meet customer needs. We see this flexibility as one of the company’s main competitive advantages. Sales in 2016 amounted to SEK 60 million and EBIT was SEK 0 million. Waystream has been listed on First North Stockholm since November 2015.

Last updated: 2018-01-09 Source: Redeye

Idag består produktportföljen av två serier accesswitchar, ASR6000 och MS4000. Bolaget lanserade i slutet av 2015 en ny produktplattform MPC 480, med MPC480 skapar bolaget ett helhetserbjudande och kan utöka kundbasen till att inkludera större aktörer. Idag pågår flertalet kundtester/offertdiskussioner och utvecklingen befinner sig i slutskedet. Vid ingången av 2017 kom genombrottsordern för MPC480 via partner i Indien. Att MPC480 nu är i produktion i Indien, en nätmiljö som bör bara mycket krävande i jämförelse med t.ex. Europa är därför väldigt positivt för bolagets fortsatta arbete och bör möjligen sänka försäljningströskeln. Förutom hårdvara säljer bolaget tillhörande mjukvara och supporttjänster.

Last updated: 2017-03-21 Source: Redeye

Fram tills 2019 förväntas antalet fiberabonnenter öka med i genomsnitt 17 procent per år vilket motsvarar 32 miljoner nya abonnenter, varav 1 miljon abonnenter i Sverige. Enligt analyshuset IDC uppgick värdet av den globala marknaden för accesswitchar och edge routrar till cirka 33 miljarder USD under 2015. Marknaden för nätverksutrustning är mycket konkurrensutsatt och består av många bolag. De allra största konkurrenterna är globala miljardbolag som Cisco och Alcatel-Lucent. Waystreams strategi grundar sig inte på att direkt konkurrera mot de ovan ledande konkurrenterna. Bolaget utmärker sig som en flexibel och kundnära leverantör som nischar sig mot mindre aktörer. De mindre aktörerna driver nät som ofta är för små för att prioriteras av bolag som Cisco och det är bland annat här som möjligheterna finns för Waystream.

Last updated: 2017-03-21 Source: Redeye

  • International expansion should enable higher growth.
  • New product platform (MPC480) will attract larger customers and allow a more complete product-offering.
  • Switching to operational sales focus in 2017 should increase the growth rate the coming years.
  • Base case amounts to SEK 15 per share and fair value range to SEK 7-20.

The investment case rests mainly on a successful launch of MPC480 and international expansion. MPC480 is already being actively marketed, and the company has several ongoing projects internationally, we believe there are a number of potential opportunities for future business.

Other factors (in addition to MPC480 and international expansion) expected to contribute to growth are strong structural expansion for fibre deployment in Europe, the company's flexible business model and a shift from product development to sales.

Since Waystream’s IPO in November 2015 the share price has been under intense pressure. There was great interest in the stock, and there was a sense of high expectations among investors. Following the listing and subsequent interim reports, which did not meet the market's high (in our opinion) expectations, the share price has more than halved. We believe the market has misjudged the company given the following factors:

– Future growth depends on the product launch and foreign expansion, which still lie in the company’s future.

– As a result of the IPO and focus on product development, Waystream has been unable to focus on sales during 2015-2016. The company switched to an operational sales focus in 2017, which has shown in the numbers where growth in sales on a R12m basis amounts to ~40 percent.

This means we see opportunities for Waystream that may not have been recognised by the market, largely due to the short-term misjudgements listed above. The company is run by experienced and skilled management that faces a journey of growth opportunities. With the backdrop of its share price decline, we believe the risk-reward in the company is currently good.

The greatest risks are related to:

– Company size. In competition with giants like Cisco, Huawei, HP, Alcatel Lucent/Nokia and Juniper it is a challenge to convince a potential customer to buy from Waystream (despite competitive products).

– Shifting from product development to sales within the organisation. A challenge that should not be underestimated.

 

Last updated: 2018-01-09 Source: Redeye

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