Highcom (ASX: HCL) – a homeland security provider

 

COMPANY SCOREBOARD

Pro PlusProCon PlusCon
  • Geopolitical environment supporting large defence budget
 
  • Low gross margin
  • No ongoing recurring revenue
  • Low management credibility
  • Low technology products
  • Regal Fund selling out
  • No intention pay dividend

ABOUT COMPANY

Highcom (HCL) (https://www.xtek.net/) provides protective security, tactical, and forensics solutions to the government, law enforcement, military and commercial sectors. The company manufactures a range of hard armor plates and helmets made using XTek’s patented XTclave process. It also has been developing the XTatlas actionable intelligence software applications for 3D mapping & modeling and tactical targeting.

CAPITAL STRUCTURE

All old directors resigned during FY21. Uwe resigned in February 2022 for medical reasons, he sold 2m shares@50c (still holds 3m) in October 2022.

Regal Funds and Altor Capital hold 10% and 15% respectively after the 26c cap raise.

BUSINESS

Below is the company’s past three years performance

The company mismanaged the opportunity of multi-year SUAS supply contract by using a large proportion of the margin for self-rewarding.

In July 2019, the company acquired a US body armour and personal protective equipment company, HighCom, for 4m shares@45c and $1.8m cash. In CY2018, it produced $10.5m revenue, which has increased to $14m in FY21.

SUMMARY

The company will need another year of $100m turnover to fix the balance sheet.