Valuation on MAXR

MAXR operates in two segments, Earth Intelligence (They take pictures of the world, and do data processing and sell them to government and commercial industry. The other called space infrastructure ( satellite manufacturing and space robotics )

Earth Intelligence: This their bread and butter where they have a high margin business as they are currently the world leaders in this space, the google map satellite picture you see it's them that took it. Their main customer is primarily the government but they are currently diversifying their revenue stream to more commercial players. They are going to launch the WorldView Legion in 2021 where they would have a higher revisit rate and much better resolution. This would cause a much lower CapEx and a higher growth rate. Compare to low earth orbit (LEO) satellites they have much better resolution and a comparable revisit rate. They have an option to expand, with all these proprietory data they can add a lot of value with software eg automated cars to map out a better version of the map, they can help farmers track vegetation growth, calculate CO2 emissions...

Space Infrastructure: This is the money-losing side of the company, currently LEO satellite is all the rage due to reduced cost for space travel and large investments backed by VC and the lower cost, so as a company that specializes in geosynchronous (GEO)  satellite they have suffered quite a bit as you see below.

However as the CEO said in a 2Q19 Investor call, they are currently reshaping space solutions to be able to break even with just 2 GEO contracts per year. As the GEO orders have bottomed I believe if there is ever a chance with GEO coming back to favor, they are in the perfect position to benefit from the trend.  As LEOs have not exactly been fully proven as seen from OneWeb, although Starlink could change that, only time will tell. The FCC actions to clear the C-Band spectrum for future 5G applications in August will require new GEO satellites to cover U.S. territories. MAXR has already won 5 out of 7 contracts. The full life cycle of a GEO is 15 years so as GEO starts to be worn out, there will be a chance of replacement and hence more orders. MAXR has also poured a lot of R&D into LEOs to try to compete with Telesat LEO Constellation, however, they have dropped out of the competition against Thales and Airbus. That doesn't mean they will give up on LEOs as the CEO said in a recent interview, he is trying to play both sides, so it doesn't matter which way the market leans towards.

There is risk attributed to the launch of WorldView legion, the risk of Starlink taking over the GEO market, difficulties with financing new debt.

I have valued this company at 40$ so I entered in at 27.7$.

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