Aerometrex cleared for takeoff on ASX following $25m IPO

Australian aerial mapper Aerometrex is set to list on the ASX on Tuesday under the ticker code AMX following a heavily oversubscribed $25 million initial public offering.

The Adelaide-based company closed its offer for 25 million new ordinary shares at $1 each and is expected to have a market capitalisation of about $95 million upon commencement of trading.

Speaking with Small Caps, Aerometrex managing director Mark Deuter said the market appears to be most excited by the fact that the company not only has “ground-breaking new technologies” but is underpinned by an established and profitable business.

“We’re looking forward to tomorrow; it’s very exciting for the company and we see it as a step towards realising the full potential of the business,” he said.

Aerial mapping technology

Aerometrex claims it has been one of the leading aerial mapping and spatial technology businesses in Australia for the last 30 years, having mapped about 3.7 million square km in its time.

The company specialises in aerial photography and mapping, light detection and ranging (LiDAR) surveys, and 3D modelling – servicing federal and state governments as well as the military and private clients in sectors such as urban planning, construction, mining, transport, telecommunications, insurance and marketing.

Aerometrex’s surveys have provided data for many major engineering projects in Australia over the last decade and the company has been commissioned by Google and Microsoft for its aerial imagery capture programs in 2D and 3D.

One of the Aerometrex’s core revenue streams is its MetroMap subscription service, which is an online aerial imagery application that provides historical and current imagery over Australian capital and regional cities.

Mr Deuter said MetroMap is “extremely competitive with everything else in the market and will really stand to kick some goals in the Daas [data-as-a-service] subscription service model”.

Four years ago, the company began to branch out internationally, conducting several assignments for organisations in the United States and Europe including producing 3D maps for clients in New York and Philadelphia and projects in France and Germany.

Aerometrex claims its point of difference from competitors, including satellite imagery and drone technology, is “image quality and accuracy”.

It also has an experienced workforce of over 80 staff and has access rights to aerial imagery data sets dating as far back as 1943.

Global growth strategy

According to Aerometrex, the global aerial imagery market stood at $1.4 billion in 2016 and was forecast to grow at a compound annual growth rate of 13.4% during 2017 to 2023.

It said key factors that will continue to drive growth in the market include technological improvements including analytical and artificial intelligence-based information extraction, the emergence of 3D mapping, continued urbanisation and environmental management.

“Within Australia, Aerometrex believes that the current demand for aerial imagery is approximately $80-90 million per annum but that figure is increasing in line with global industry forecasts,” it stated in its prospectus.

The company has outlined a strategy focused around growth of its MetroMap data subscription services and professional aerial survey project services.

Mr Deuter said Aerometrex has already embarked on an aggressive capture program for more imagery for MetroMap, which includes capturing Australia’s major capital cities four times a year.

In addition, he said the company has been extending the coverage to regional centres, capturing cities such as Townsville, Rockhampton, Ballarat, Dubbo and the Sunshine Coast in the last few months.

“We’re spending quite a bit of money on the capture programs but also in improved sales and marketing efforts – we’re pretty much doubling our commitment to sales and marketing,” Mr Deuter added.

Aerometrex also intends to pursue further international growth opportunities, particularly in the US and Europe with its 3D modelling service.

A US subsidiary, Aerometrex Ltd, has already been established with a small team of employees expected to market the service and conduct imagery capture operations in this large market.

“Aerometrex has multiple sales strategies for tackling the United States market, involving direct project sales as well as developing sales channel partner relationships and subscription models,” the company said.

“We think we’ve got the right people in view there and they will grow that operation quite successfully with only a small capital investment,” Mr Deuter added.

Aerometrex also believes its 3D modelling service can be “scaled up to meet international demand relatively easily”.

“The camera systems used are comparatively lightweight, inexpensive, and can be used with locally-sourced helicopters as aerial platforms, so there is no requirement to relocate aircraft or large equipment around the world.”

“Imagery can be processed in the cloud or at Aerometrex’s head office. This service can be mobilised anywhere in the world and ready to fly within 48-72 hours, weather permitting,” it stated.

Use of funds

Aerometrex has reserved about one-third of the IPO proceeds for its MetroMap application and another 20% has been allocated to its 3D modelling business.

About 14%, or $3.5 million, is earmarked for its planned expansion in the US and another $3 million is being budgeted for research and development.

Project services capital, as well as advisory, underwriting, prospectus and ASX listing costs make up the remainder of the funds’ purpose.

Financial performance

Aerometrex’s revenue has grown from $9.7 million to $16.1 million over the last two financial years with photo-contracting/mapping and LiDAR each accounting for about 40% of total revenue.

Over the same period, earnings before interest, tax, depreciation and amortisation has grown from $1.6 million to $5.2 million, while EBITDA margin has improved from 16% to 32%.