YPB Group has secured a three-year contract to provide its invisible supply chain authentication solution to a major US casual footwear brand, with its tracer technology set to be incorporated in 70% of the brand’s entire production. The contract, believed to be with Crocs, is the second major transaction secured by YPB in the Americas this quarter. It follows further support for YPB’s product in China with Beijing Sandun Card Technology choosing YPB’s anti-counterfeit technology for security passes for the People’s Procuratorate of Beijing Municipality. Our DCF valuation is A$0.44/share, having incorporated the recently completed A$7.8m capital raise.
YPB has cemented new relationships and contracts this quarter which will take the company’s anti-counterfeit technology into new regions. In addition to its contracts with Crocs and Sandun Card Technology, YPB has forged an exclusive joint venture with US-based Affyrmx Group focused on the protection of government documents in Latin America. The joint venture agreement, which has a six-year life, has already yielded two revenue producing orders, with YPB to provide highsecurity vital record documents to the states of Jalisco and Guanajuato, Mexico.
YPB has promoted Jens Michel, its global chief operating officer, to chief executive officer, allowing executive chairman and founder John Houston to focus on driving the company’s strategy and building investor relationships. Mr Michel joined YPB in September 2015 and has extensive experience across Asia, Australia, New Zealand and Europe including regional leadership in multi-billion dollar technology companies. YPB has also strengthened its board with the appointment of veteran capital markets executive Gerard Eakin as a non-executive director. Current director Dr Geoff Raby has announced he will not stand for re-election at the 2016 annual general meeting but will continue to support YPB as a consultant in China.
We have revised our DCF valuation to A$0.44/share from A$0.50/share previously, after taking into account the December placement to raise c A$7.8m at A$0.26/share and including in-the-money options expiring in October 2017 and the cash forthcoming on these options. We have also made a number of earnings adjustments to our FY16 and FY17 forecasts following the reported FY15 results, reflecting higher than expected opex.