EVSNF - Elbit Vision Systems Ltd

[antao]

Company based in Israel that designs, develops, manufactures, markets and supports automatic inspection and quality monitoring systems for the textile and other fabric industries. This play is mainly a bet on the future of Its latest product - the iBar.

 

Contrary to traditional loom inspectors - which detect defects only on finished products - the iBar inspects the fabric in real-time as it is being woven in the loom, which saves costs and fabric waste. I have witnessed in weaving plants the advantage this product can bring versus traditional automated defect detection solutions currently used.

 

Customers that have tried the iBar are re-ordering  (according to the CEO, there has not yet been a case where a customer tried one iBar unit and did not re-order). They have received 1,6M$ in orders in September alone.

 

Introduced in 2014, the iBar represents 30%+ of the company’s sales and is expected to grow to as much as 90%. The iBar has contributed to the increase in gross and operating margins to over 55% and 20% respectively. TTM Rev growth is 34% and ROE sits at 71,5%. PE of 11 and interest coverage of 18x.

 

Their total iBar sell count up until August is 170. and currently have 1 or 2 iBar units being testes in 20/25 clients, which has remained fairly constant for the last 6 months. If all of those would implement the iBar solution across their manufacturing, that would amount to at least 200 units. The main reason why there are so few iBars being tested by clients and the iBar sales not growing at at a faster pace is related to challenges in the servicing and support of the units, which management estimates will be resolved by early 2017. After these issued are resolved, the remaining infrastructure is already in place to accommodate larger growth (100s to 1000s iBars produced every year in their 2 facilities, in Israel and South Carolina).

 

Current management - in place since 2010 - has a sizable interest in the company ownership. They have been studying - and are currently compliant with the requirements needed for - an uplifting and a reverse split to broaden the shareholder base. Dilution occurred in 2016 because a large shareholder exercised his warrants, which won’t happen again for the foreseeable future.

 

I encourage you to check the report by Tomer Cohen at Five Roads Capital Management on SZ.

[SnarkyPuppy]

Has anyone received cash from the merger?