Value Microcaps Zip Code Changers

[Bobwins]

SIM.v/SIMFF +.005 to C$.45

note from Canadian analyst covering Siyata. Note the timeframes for the various cell companies to take down their 2G networks.

February 14, 2017
Daniel Kim, 416.363.6644, [e-mail]
Siyata Mobile Inc. (SIM-T): Due Dili Confirms Our Thesis
Highlights:
Given the breadth of Siyata Mobile’s customer list, our due diligence is an ongoing process. Recall SIM leverages carrier relationships to sell its solutions in a myriad of end markets. In that we regard, we have had recent conversations with a North American authorized dealer and one of Israel’s largest mobile operators. Each of them are long standing large customers of Siyata both praising the company in many areas: “great company to work with, with great products and no issues..importantly its hardware solutions work very well with its integrated software”. Our key findings are summarized below:
· In the case of Israel, this customer confirmed Siyata is the market leader in this niche and stands alone with no competition. In terms of alternative Push-to-Talk (PTT) software solutions, there are two. First, Motorola, who has virtually no installs or customers; and second, Mobile Tornado, a much smaller player with only 70k subs versus industry leader Kodiak at 2.5M. Furthermore this customer has not seen any other vendor with Kodiak installed.
· This Israel mobile operator has 1.5M subs with 120k on the old iDEN network (PTT). It just started offering Siyata’s PTT over cellular (PoC) service in September and is strategically targeting its key opinion leaders i.e. its largest customers. 4K subs have already migrated since launching its PoC service in November 2016, across various verticals and with the iDEN network scheduled to shut off in 2019, it expects continued migration at an accelerated pace. Its key verticals include: police, pharma, taxis, ambulance, infrastructure (i.e. trucking), government and security. 95% of its iDEN users who try Siyata’s PoC solution “love it”, so they expect the bulk of iDEN users will transition to this solution.
· With regards to the North American dealer, it stated its customers (ambulance is a key vertical) are agnostic to 3G or 4G solutions. The bigger driver for adoption is the need for a rugged phone so its customers can have PoC capabilities outside of the vehicle. This dealer confirmed they have not seen any competitive solutions and they have been working with Siyata for two years now. In all tenders, Siyata’s solution is the only one at the table with PoC capabilities.
· The other key driver is the shutdown of 2G/CDMA networks: Verizon by end of 2019; AT&T Q1/17; T-Mobile 2020; and Rogers, the last Canadian carrier, by 2018. We saw this hit BSM Technologies latest quarter, with expected loss of most of its 10,000 2G customer with AT&T. Clearly with sockets opening up, this is a huge opportunity for SIM.
Despite the run up in the stock, the company still trades at a discount to its peers — at 6.0x versus its peers at 9.2x on 2018 EV/EBITDA; alternatively 0.9x EV/Sales versus peers at 1.6x. With continuous contract awards (three key catalysts being 2G shutdown, PoC demand and new 4G/LTE products); growing revenue and EBITDA; and potential for accretive acquisitions; we believe this discount will change rapidly. Applying a 10x EV/EBITDA multiple to our conservative 2018 EBITDA estimate of $5.1 million yields a 12-month target price of $0.70. We see lots of upside both to our multiple and estimates.

PCI’s disclosure policies and research distribution procedures can be found on our website at: http://www.paradigmcap.com

Daniel Kim
Partner, Managing Director
Head of Research
image001
95 Wellington St. W., ste 2101
Toronto, Ontario, Canada M5J 2N7
w/ 416.363.6644
m/ 416.728.5630
Paradigm research and coverage list can be found at www.paradigmcap.com

https://ca.linkedin.com/in/daniel-kim-34b41766