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PhotonStar LED – shares 'roof it' on a “proposed roll out” announcement. Hmmm…

By Steve Moore | Friday 28 April 2017

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.

Shares in PhotonStar LED (PSL) are currently roofing it on the back of a “Proposed roll out of Halcyon IoT platform” announcement. Let’s review…

The announcement is of a letter of intent, following a trial period which “demonstrated significant maintenance savings”, “from a leading manager and developer of student accommodation in the UK”.

It is noted “pursuant to the letter of intent, it is proposed that approximately 50,000 of the company's Halcyon devices will be installed”. This is with the customer having “multiple sites in 24 UK cities” (“the site by site installation of halcyon is expected to take approximately 18 months”), though these will now be surveyed “to assess the individual requirements for each site”. It is added;

“Due to the practicalities of this roll out it is intended that each site will have its own purchase order issued to the company and there will not be a single large formal contract which covers all the installations. The company will provide further announcements regarding the installations as appropriate.”

Hmmm. So at this stage it’s only “pursuant to the letter of intent, it is proposed…”, the sites still to be surveyed, each to have its own purchase order and no financial information provided. All clear then!

What was clear from an end-January profit warning was that it is cash crunch ahoy, with that announcement also including that “trials indicated that certain software features and upgrades were needed to improve the performance of large systems”.

Will this be a smooth 18 month roll-out then? The January trading update would also suggest there not enough cash. I continue to avoid.

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