Thanks for publishing these - very interesting. I've been lurking on Substack for a while but am only now starting to get to grips with it.
CYAN Your summary on CYAN - and especially the question - what's up with the inventory? Great Question. Has caused me to spend many hours down a rabbit hole. And I came out with some interesting findings. At least I think so.
Short answer [1] CYAN outsourced manufacture. [2] Inventory is primarily long lead components (US chip) [3] previous end of life buy for old gateway chip was expensive [4] now shipped and inventory holds more much less expensive new chips [5] some of H2 demand has been advance manufactured - 567k units shows up in current contract assets. I estimate they probably made 1.2m units in H1 with 0.6m shipped (comparing order back logs and new orders) and that H2 mfr production needs to be around 1,3m units - based upon a £10,/unit price for a round number. Which still may too high - I suspect more like £7 or £8? But thats a guess. Likely they are paid for modules separately from deployment of meters and commissioning of network. Then moves to service revenue at low level but high margin,.
Note that if FY26 orders arrive at the anticipated volumes they will need to keep advance manufacturing so still a squeeze on working capital - and need to commit to volumes in time for their manufacturing partner to install additional production lines to meet contract deadlines. Tough balance - esp as end customer for all these meters is the Indian government. Not noted for rapid payment - but also desperate for the networks so eventual payment you can take to the bank (factor)?
I added more details to this rabbit hole on my CYAN post on the recent interims not sure it shows up in searches yet - link is
Apologies - I am very slow generating readable thoughts and my substack is primarily for my own benefit and I am unaccustomed to publishing. Hope to get more practice soon,
Seems to be a good substack small cap community developing - long may it continue,
Thanks for publishing these - very interesting. I've been lurking on Substack for a while but am only now starting to get to grips with it.
CYAN Your summary on CYAN - and especially the question - what's up with the inventory? Great Question. Has caused me to spend many hours down a rabbit hole. And I came out with some interesting findings. At least I think so.
Short answer [1] CYAN outsourced manufacture. [2] Inventory is primarily long lead components (US chip) [3] previous end of life buy for old gateway chip was expensive [4] now shipped and inventory holds more much less expensive new chips [5] some of H2 demand has been advance manufactured - 567k units shows up in current contract assets. I estimate they probably made 1.2m units in H1 with 0.6m shipped (comparing order back logs and new orders) and that H2 mfr production needs to be around 1,3m units - based upon a £10,/unit price for a round number. Which still may too high - I suspect more like £7 or £8? But thats a guess. Likely they are paid for modules separately from deployment of meters and commissioning of network. Then moves to service revenue at low level but high margin,.
Note that if FY26 orders arrive at the anticipated volumes they will need to keep advance manufacturing so still a squeeze on working capital - and need to commit to volumes in time for their manufacturing partner to install additional production lines to meet contract deadlines. Tough balance - esp as end customer for all these meters is the Indian government. Not noted for rapid payment - but also desperate for the networks so eventual payment you can take to the bank (factor)?
I added more details to this rabbit hole on my CYAN post on the recent interims not sure it shows up in searches yet - link is
https://substack.com/@illiswilgig
Apologies - I am very slow generating readable thoughts and my substack is primarily for my own benefit and I am unaccustomed to publishing. Hope to get more practice soon,
Seems to be a good substack small cap community developing - long may it continue,
Mark (Allery) @Illiswilgig
I really enjoy these weekly updates, thanks for publishing them :-)