Could Seeing Machines really double?

Dozy drivers causing carnage on the roads may be a thing of the past if Seeing Machines has its way. The AIM-listed tech outfit's software can quickly detect if a driver is nodding off at the wheel and trigger a series of alerts to get their eyes back on the road.

It's now confirmed a 15-year tie-up with TK Holdings, part of Japanese giant Takata Corp, and there's a real sense that this could be just the beginning.

Having worked together for years, SEE's tech will now be used in Takata's advanced driver safety systems (ADAS). And a contract to deliver the first ever mass-manufactured driver-monitoring system has just been won - reports suggest General Motors has placed an order to kit out as many as 500,000 vehicles over the next five years.

SEE will receive minimum licence fees and royalties that will seriously boost revenue. Lorne Daniel, an analyst at finnCap, reckons the mutually exclusive alliance underpins forecasts for top line growth of 50% to A$25.2 million (£14.2 million) in the year ending June 2015, and almost two-thirds the year after to A$41.7 million.

Forecasts had factored in this latest deal, but others could follow suit - Takata already supplies seatbelts, airbags and other safety features to Honda, Toyota, BMW and Mercedes.

And the market for this technology extends beyond road cars. SEE signed a deal in May last year to supply mining equipment maker Caterpillar with its fatigue monitoring system - that helped grow driver state sensor (DSS) sales by 57% to A$14.5 million last year. Both rail and aviation are also possibilities further out.

Admittedly, profits are still three years away - finnCap pencils in adjusted pre-tax profit of A$0.6 million in 2017 - and heavy investment last year turned a A$0.6 million profit into a A$2.6 million loss. But after recent fundraisings, SEE has the cash - A$22.7 million and very little borrowing - to get through to profitability, and the valuation multiples will fall quickly once the money starts to roll in.

SEE shares rocketed 28% on the Takata news to 6.23p, but finnCap reckons they'll be worth 12p at some point. More deals like these and it could be more.

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.