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Addvalue Technologies Sees A Surge In Space & Defense Orders · Investor Exchange

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  Time for another Investor Exchange podcast.
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  Here are your hosts, Matt and Sally.
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  Welcome directly to today's Deep Dive.
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  We are jumping right into it because we have a fascinating investor-focused briefing today.
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  Yeah, we are looking at a highly detailed Maybank research update from June 8, 2026
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  covering ad value technologies.
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  Exactly.
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  And the goal for you listening today is to cut through all the usual fluff.
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  We are going to analyze exactly why this company's recent massive order wins are turning heads.
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  Right, and what is actually driving their financial turnaround, plus what the future
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  holds for a potential investor.
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  Right.
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  So to really understand their current position, I think we have to start with the main headline
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  event that triggered this update, which is this massive influx of new orders.
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  Yeah, the order book is just exploding right now.
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  It really is.
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  I mean, they just landed a recent order win of 5.1 million United States dollars for their
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  inter-satellite data relay system.
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  Which is a huge deal for them.
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  Huge.
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  And for those who might not be super familiar, this system provides continuous communication
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  between satellites.
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  But what stands out to me here is that this specific order includes a brand new customer
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  requesting multiple terminals.
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  Right.
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  And that it's specifically to support upcoming Earth observation and in-orbit services.
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  Yeah.
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  And to put this in perspective for you, the total orders for this satellite system in
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  just the first half of 2026 hit 15.2 million United States dollars.
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  That is a massive jump.
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  Right.
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  Because if you compare that to just 4.2 million in the first half of 2025, and then 3.8 million
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  in the first half of 2024.
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  And practically tripling year over year.
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  Exactly.
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  It is like a local wholesale bakery that normally supplies maybe two or three cafes suddenly
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  securing a contract to supply every single coffee shop in the state.
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  That is a really good way to look at it.
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  So my question is, is this just a one-off lucky break?
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  Or is there some structural reason they are suddenly securing a new customer for all these
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  multiple terminals?
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  Well, it is definitely not just luck.
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  This reflects a much broader structural demand in the space sector right now.
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  Oh, really?
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  How so?
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  Well, by securing new customers specifically for Earth observation, the company is proving
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  that their technology is becoming essential infrastructure, not just some experimental
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  niche product anymore.
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  Right.
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  And that observation data is only valuable if you can get it down to Earth quickly.
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  Exactly.
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  And having an influx of orders is obviously a great headline.
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  But as an investor, you need to see how that actually translates into real financial performance.
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  Right.
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  The actual profitability.
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  Because millions of dollars in orders is great for a press release, but scaling up costs
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  money.
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  It really does.
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  But if you walk through the company's financial turnaround, which, you know, really took hold
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  in the financial year 2025, the numbers are solid.
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  I was looking at those revenue projections.
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  They're growing from 16 million United States dollars in 2025 up to 25 million in 2026.
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  Yeah.
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  And it is projected to hit 33 million by 2027.
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  That is serious growth.
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  And the bottom line is following along to their core net profit is expected to rise
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  from two million United States dollars in 2025 up to five million in 2026 and then eight
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  million in 2027.
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  The growth trajectory is incredibly steep right now.
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  But I do have to push back a little bit here because I am looking at these margins and
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  they are incredibly high.
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  The gross margins are over 50 percent.
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  Which is unusual for this sector.
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  Extremely unusual.
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  Usually, hardware manufacturing is a tough, low margin business because, you know, you
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  have the cost of physical parts and assembly.
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  So why are their margins so high?
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  That is the big question.
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  Is there some sort of recurring revenue element here, like a software subscription or something?
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  You hit the nail on the head.
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  The business model is highly lucrative because there is recurring income that builds over
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  time as more satellites are launched.
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  Ah, OK.
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  So it is not just a one-time sale of the hardware.
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  Exactly.
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  There is an airtime revenue component.
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  And that airtime revenue acts as a super high margin base.
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  Meaning that as the overall revenue grows rapidly from selling the hardware, the net
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  margins just get better and better.
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  Precisely.
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  So if the hardware is up in orbit, collecting that data traffic toll requires almost zero
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  physical overhead.
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  That makes a lot of sense.
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  So strong current financials are definitely promising.
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  But as an investor, you want to know how the company actually plans to sustain and scale
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  this growth moving forward.
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  Yeah.
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  You always have to look at what is next.
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  And for them, that means the advanced digital radio segment.
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  Right.
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  The drone defense stuff.
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  The research explicitly mentions that orders here are expected to surge in the second half
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  of 2026.
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  Yeah.
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  And that is being driven heavily by governments globally demanding anti-drone solutions.
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  Drones are everywhere now, so defense forces desperately need agile, secure communications
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  to counter them.
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  But how are they going to keep up with all this demand?
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  Well, they are currently undertaking significant renovations to physically double their manufacturing
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  capacity.
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  Wow.
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  Doubling it.
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  Yeah.
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  Up to 200 units per year just to keep up with the demand from both the space relay and the
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  drone defense divisions.
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  That is a massive operational expansion.
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  But there is another major game changer we need to talk about.
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  The company is exploring a listing of its satellite business on a major United States
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  technology stock exchange.
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  Yes.
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  Specifically the NASDAQ.
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  Right.
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  And to me, that is like an indie band leaving some small local label to go sign with a massive
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  global record company.
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  That is a perfect analogy.
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  The scale is just totally different.
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  Because the research estimates a potential United States market capitalization of $180
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  to $250 million United States dollars.
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  That is far higher than their current Singapore valuation.
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  Vastly higher.
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  Yeah.
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  So how could this massive influx of capital and this much higher valuation actually change
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  the company's trajectory?
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  Well, United States valuations for space and drone technologies are traditionally just
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  much, much higher.
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  A successful listing would put them right at the forefront of the global space scene.
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  It gives them a totally different level of credibility.
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  It really does.
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  Yeah.
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  And potentially, it allows them to return cash directly to their existing shareholders
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  or even aggressively pursue mergers and acquisitions to grow even faster.
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  Oh, right.
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  Using that highly valued stock to just buy up smaller competitors.
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  Exactly.
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  It gives them a very powerful currency.
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  It sounds like a perfect upward trajectory.
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  But a balanced objective investor must always turn the page and look at what could derail
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  this momentum.
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  Always.
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  You have to do a reality check.
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  So let us talk about the risks.
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  One thing the report highlights is the risk of decreasing sales in their older legacy
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  satellite communications business.
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  Right.
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  The older technology could see a drop off.
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  And there is also the financial drag of winding down their China subsidiary.
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  Yeah.
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  Winding down operations is never cheap or easy.
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  There is also this customer concentration risk, which means they are relying on just
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  a few massive buyers.
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  That could give those key buyers way too much bargaining power.
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  Which could definitely squeeze those impressive 50% margins we talked about earlier.
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  Exactly.
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  And additionally, there are the project execution risks.
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  We are talking about tight specifications and incredibly complex supply chains required
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  for space-grade hardware.
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  Building stuff for space is basically a zero-tolerance game.
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  Right.
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  There is a specific risk I really wanted to push back on regarding working capital
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  and liquidity.
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  OK.
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  Let us hear it.
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  If you are doubling your manufacturing capacity and dealing with these complex supply chains,
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  you have to buy a massive amount of highly specialized parts up front.
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  You do.
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  Long before you ever get paid.
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  Exactly.
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  So are we looking at a situation where they have millions in orders on paper, but they
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  run into a cash crunch trying to physically build them before getting paid?
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  It is a very valid concern.
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  This balance sheet reality is tough.
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  Higher receivables and the need to build inventory with these long lead times can indeed heavily
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  strain their liquidity.
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  It skews their near-term cash generation completely.
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  It does.
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  However, there is a silver lining here.
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  There is a mandatory conversion for bondholders scheduled for early 2026.
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  Wait, really?
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  So debt is being converted into equity?
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  Yes.
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  And that is a highly positive step for strengthening their balance sheet against these exact working
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  capital risks.
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  Oh, wow.
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  So the debt obligation gets wiped out, they stop paying the interest, and their balance
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  sheet thickens right when they need the cash to buy parts?
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  Exactly.
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  It happens at the perfect time.
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  That is incredibly strategic.
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  Well, I want to leave everyone listening with a final thought on the broader industry here.
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  Because we always see the famous billionaires launching massive rockets on the news.
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  But as space technology becomes more accessible and drone defense becomes a standard requirement
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  for governments globally, the companies supplying the critical communication links might actually
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  be the ones to watch.
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  Right.
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  The invisible infrastructure.
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  Exactly.
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  They are the picks and shovels of this modern gold rush.
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  And they might hold the most strategic power, quietly underpinning the entire ecosystem.
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  That is a great way to summarize it.
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  And on that note, this content is intended to serve strictly and only as an informational,
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  independent, objective summary of recent events, and should in no way be interpreted, construed,
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  or relied upon by any party as inside information or financial advice.