Wednesday 19th April 2017
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Syft Technologies, which makes high-tech chemical sniffer devices to test air quality, moved its share trading platform back to the Unlisted market to improve liquidity and raise its profile as it eyes a future capital raising.
Christchurch-based Syft moved trading in its stock to Unlisted from Computershare's ShareMart electronic order matching system from today, according to a statement on the Unlisted market. The company's stock last traded at 1.9 cents apiece on Unlisted in 2009, and then moved to its own over-the-counter trading service, before shifting to ShareMart. The return to Unlisted gives the company more exposure, offers its 650 shareholders more liquidity, and was cheaper than rival NZX, Syft said. The stock hadn't yet changed hands on Unlisted in early trading today.
The move to Unlisted follows a turnaround in Syft's fortunes. Founded in 2002 by the University of Canterbury's commercialisation arm, the company churned through $29 million of investors' cash in its first decade without producing a profit. However, since chief executive Doug Hastie took the helm five years ago, he has bolstered the sales team, cut manufacturing costs and signed on new international distributors. The firm has recovered from bankruptcy in 2012 to post a profit the past two years.
Syft has been funding its activities from working capital, although it will look to raise cash in the relatively near future to support its fast growth, Hastie said.
In its latest financial year ended March 31, 2016, Syft's revenue rose 16 percent to $6.4 million, while its profit jumped 186 percent to $1.4 million and its profit margin widened to 21.4 percent from 8.7 percent. Net debt reduced to $78,000 from $321,000.
Syft said it expects to be selling between 500 to 1,000 of its instruments a year, generating revenue of between $125 million to $250 million, within the next five years as it gets a foothold in the multi-billion dollar market.
The company has found a fast-growing customer in South Korean electronics manufacturer Samsung, which is its largest repeat client, with 24 machines. Other customers include South Korean electronics giant LG, US consumer products company Colgate-Palmolive, US household cleaning products manufacturer SC Johnson, kiwi dairy giant Fonterra Cooperative Group and several major car manufacturers.
The company said there is "boundless potential" in its core product, which uses sensors to sniff out contaminants in the air, even in minuscule amounts. It's exploring new markets and applications for its technology, including testing the atmosphere in shipping containers to make sure produce isn't spoiled, and developing process to get rid of the 'new car smell', which many Asian consumers find offensive.
It also has technology for the environmental industry to monitor potentially harmful gases, and rapid trace analysis for high-precision technology manufacturing equipment, which can be damaged by contaminants in the air.
"The size of the market is huge," Hastie said. "There is no limit to our growth because our technology can solve so many problems."
Much of Syft's business comes from the US, but it's about to open an office in Germany to focus on opportunities in Europe, and an office in China to service the Asian market.
The company has been recapitalised with Hastie as its largest shareholder with a 15 percent stake, followed by the Accident Compensation Corporation with 14 percent. The board has also been rejigged, although former finance minister Ruth Richardson remains as chair.
Syft cited independent analysis from Eastbourne Advisory suggesting it could be the target of corporate activity in the future, although it noted the company was expected to build its brand and sell higher volumes before this was considered.
"At the right time, a partnership with one of the larger players in the market could in our view see a significant increase in market share and the creation of tremendous value for shareholders," analyst Andrew Mortimer said.
For the Unlisted market, the addition of Syft increases its securities to 15, representing 14 issuers with a combined market value of $2 billion. Share trading on Unlisted takes place through its six registered brokers.
Syft's move to Unlisted follows Mount Maunganui-based Zespri International, the global marketer of New Zealand kiwifruit, which moved its share trading platform to Unlisted from ShareMart in February last year. ShareMart still offers trading for EastPack, MTF Vehicle Finance, and Waikato Property Investments Ltd., according to its website.
BusinessDesk receives assistance from Callaghan Innovation to help cover the commercialisation of innovation.
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