(SIM) SimiGon

The Investors Chronicle
03-04 Dec 2011
http://www.weekendcitypressreview.co.uk/subscriber/this-weeks-review
Malar Velaigam suggests eight small tech stocks with good prospects: SimiGon, Seeing Machines, Sarantel, Top Level Domain, DDD Group, Quindell and Vislink.

SIM get a positive mention in today's Inv Chronicle and that they are on a p/e of only 6.

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7:20 am
The Times
http://bit.ly/qYs3nR
Tiddler to watch: SimiGon jumped 35.9% to 63/4p, after XCAP met its management and gave the shares a push. The broker said that the Florida-based, Israeli-managed supplier of simulator software stands to benefit from tighter defence budgets. From next year, SimiGon will charge $10,000 (£6,500) for every pilot who takes a course to fly the Joint Strike Fighter.

Simigon shares take off as investors focus on flight simulator’s progress
4:29 pm by Jamie Ashcroft
http://bit.ly/qG2pAR

Earlier this month Simigon won a $2.6 million with the US Air Force to simulate a T-6 Texan II training aircraft
Investors may be waking up to the potential of micro-cap software firm Simigon (LON:SIM) as the stock shot up over 50 per cent today.
September has been a busy and productive month for the Orlando-based software firm, which has developed a flight simulator package for fighter-jets. But until it was tipped by XCap Securities analysts this morning, it seemed much of this progress has gone under the radar for most investors.

At the very start of September Simigon – which is valued at less than £5 million - announced a US$2.6 million contract with the US Air Force. Through this deal the group’s SIMbox MTD simulators, configured to simulate a T-6 Texan II training aircraft, will be used to train undergraduate Remotely Piloted Aircraft (RPA) students.

The contract is expected to start generating revenue for Simigon during the current financial year, and it is expected to improve visibility over next year’s revenue too.

Two weeks later, on September 14, Simigon released positive interim results, which it reported a 131 per cent uplift in revenue to US$2.43 million and a modest net profit of US$0.01 million which represented an improvement from the US$1.68 million loss it reported a year earlier.

In the wake of the results Simigon chief executive Amos Vizer said he was confident that the company would return to revenue growth in the full year.

While these events were undoubtedly positive there was little movement in the shares, which have barely twitched from the 5p mark since last summer. But this morning XCap Securities put the stock in focus this morning, with a note to its clients.

XCap analyst Tim Freeborn, who bought 100,000 Simigon shares for himself on Wednesday, said: “After over two years' effort Simigon gained prime contractor status on the Joint Strike Fighter.

“From next year it will charge US$10,000 for every pilot who takes a course to fly the plane. There will be many thousands of them.

“The software starts them off flying a PC and eventually graduates them to $30m simulators. A PC is much cheaper than a simulator, which in turn is cheap compared to flying the aircraft itself. Tight budgets are therefore good news.

“The company believes the contracts where it is already selected will generate US$120 million of revenues over the next ten years. The current backlog, covering the next 12 months, is already worth US$4.9 million. Gross margins seem to be around 85 per cent.”

It is important to add that Simigon has had something of a chequered past. Indeed back in 2007, just a year after its £10 million AIM IPO its shares collapsed.

The trouble is that the group’s software is used in 23 air forces around the world but it is only used countries that are ‘friendly to the United States’ military, Freeborn explained in his note. Back in 2007 the US government blocked a significant deal with the Chinese. And since then the shares have languished.

So after a busy September many investors will now have their eyes fixed on this micro-cap software firm to see if it can take off once again.

On AIM Simigon shares closed Thursday's session up 1.75p, about 56 per cent, at 6.625p.