Nuheara Ltd (NUH) – Meeting Notes
Reach Markets publish the notes from our analyst meetings with company management. They should be read in conjunction with the research we’ve completed. Reach Markets endeavour to provide self-directed investors a seat at our investment meetings. We publish these notes in a conversational format to get these out as quickly as possible for your consumption.
We recently had a one-on-one meeting with Justin Miller, who is Co-founder and Managing Director of Nuheara. Located out of Perth and San Francisco (America), NUH is an innovative audio wearables company that has developed proprietary and multi-functional intelligent hearing technology that augments a person's hearing and facilitates cable free connection to smart devices. The key points were:
- Co listed on the stock exchange via RTO (reverse takeover) in March 2016 @ 2.5cps. Current market cap $74m. Justin noted all the legacy issues (shareholders etc) from the RTO have now washed through and the Company is clean from that perspective.
- NUH is already earning revenue, with global sales of $4m in FY18 (vs. $2.5m in FY17).
1. IQbuds Classic released in Jan-17, average age of user 38 years, and retail price US$300.
2. IQbuds Boost released May 2018, includes EAR ID Personalisation technology, average age of user 50 years, and retail price US$500. Management noted they very quickly sold out of first 2,500 units.
1. Live IQ to be released Q4 2018, which will be progressive to DVT with possible OEM opportunities (white label for clients);
2. IQbuds Max to be released in 2019, which will have maximum intelligence and personalization
NUH’s products retail for US$300 – 500 per unit versus average mid-range digital hearing aid $7,000 (up to $14,000).
The company is targeting a market, which they believe is under serviced at this moment – the mild to moderate hearing loss segment (which makes up 75% of the total hearing loss market). The theory is that mild to moderate hearing loss patients are normally turned away given the cost for a hearing plant is so high. If an affordable and accessible device is provided to mild to moderate patients, they are more likely to consider it given the difference device makes to one’s hearing. For the retailers it opens a new market to service which they would normally be turning away. Company believes its total U.S. market potential p.a. is $2.52bn (U.S. always tends to be the largest market) and Total Global market potential is at $6.3bn. Product cycle is roughly 3 years.
NUH is already well represented on Amazon, Best Buy, Selfridges, Harrods, Bloom, Brookstone etc – approximately 1,500 global outlets. The issue has been that while the product is available, it needs a consultative approach to sales – that is, sales rep need to understand the product to be able to talk to customers and it needs to be properly positioned in the shop (cannot be lumped in with headphones…Best Buy has in fact now created a separate marketing area specifically for these types of products in their shops to help with this product differentiation). NUH has recently signed with a major Italian Optical chain Vision Group to extend trials across 300 stores (initially started with 50), with the potential to roll out across 2,500 stores. These stores are like Spec Savers, which provide a more consultative approach to selling NUH’s products.
Via its existing customers, the Company is collecting significant amount of data which will be very useful (customer trends, usage, applications etc).
1. Approaching the critical selling period of December, which will be a good test to see how the new retail strategy executes and results delivered.
2. Significant experience operating in the U.S., given it a key and large market.
3. Appears to have a creditable management team, with the Executive Chairman / CEO Justin Miller already successfully running a similar company Sensear (smart digital headsets) but in the industrial space globally with clients such as ExxonMobil, Chevron, ConocoPhillips, BP, Shell.
4. Recently appointed Chief Sales Officer with previous experience from Samsung Electronics Australia.
1. Will require more capital raisings to fund growth;
2. Larger competitors decide to move into this space;
3. slow uptake of sales may disappoint investors;
4. new competitors (not just large corporations with balance sheet firepower);
5. key may risk (Executive Chairman / co-founders);
6. product recall or device failure; and
7. the product and market need more awareness / education (this will require additional investment).
Like the market, pricing point and new sales distribution opportunity (understand how they need to pull through sales). Management has execution experience globally and the company is already generating sales. Interesting play on a thematic we are already playing via COH in the large cap space. Still highly speculative.
Recommendation Rating Guide
|Recommendation Rating Guide||Total Return Expectations on a 12-mth view|
|Speculative Buy||Greater than +30%|
|Buy||Greater than +10%|
|Neutral||Greater than 0%|
|Sell||Less than -10%|
Reach Markets Disclaimer
Reach Markets Pty Ltd (ABN 36 145 312 232) is a Corporate Authorised Representative of Reach Financial Group Pty Ltd (ABN 17 090 611 680) who holds Australian Financial Services Licence (AFSL) 333297. Please refer to our Financial Services Guide or you can request for a copy to be sent to you, by emailing [email protected].
Read our full disclaimer here >
This publication contains general securities advice. In preparing the advice, Reach Markets Australia has not taken into account the investment objectives, financial situation and particular needs of any particular person. Before making an investment decision on the basis of this advice, you need to consider, with or without the assistance of a securities adviser, whether the advice in this publication is appropriate in light of your particular investment needs, objectives and financial situation. Reach Markets Australia and its associates within the meaning of the Corporations Act may hold securities in the companies referred to in this publication. Reach Markets Australia does, and seeks to do, business with companies that are the subject of its research reports. Reach Markets Australia believes that the advice and information herein is accurate and reliable, but no warranties of accuracy, reliability or completeness are given (except insofar as liability under any statute cannot be excluded). No responsibility for any errors or omissions or any negligence is accepted by Reach Markets Australia or any of its directors, employees or agents. This publication must not be distributed to retail investors outside of Australia.
It is recommended that you seek independent advice and read the relevant Product Disclosure Statement before making a decision in relation to any investment. Any advice contained in this communication is general and has not taken into account the investment objectives, financial situation and particular needs of any particular person.
Banyan Tree Disclaimer
This document is provided by Banyan Tree Investment Group (ACN 611 390 615; AFSL 486279) (“Banyan Tree”).
The material in this document may contain general advice or recommendations which, while believed to be accurate at the time of publication, are not appropriate for all persons or accounts. This document does not purport to contain all the information that a prospective investor may require. The material contained in this document does not take into consideration an investor’s objectives, financial situation or needs. Before acting on the advice, investors should consider the appropriateness of the advice, having regard to the investor’s objectives, financial situation and needs. The material contained in this document is for sales purposes. The material contained in this document is for information purposes only and is not an offer, solicitation or recommendation with respect to the subscription for, purchase or sale of securities or financial products and neither or anything in it shall form the basis of any contract or commitment. This document should not be regarded by recipients as a substitute for the exercise of their own judgment and recipients should seek independent advice.
The material in this document has been obtained from sources believed to be true but neither Banyan Tree nor its associates make any recommendation or warranty concerning the accuracy, or reliability or completeness of the information or the performance of the companies referred to in this document. Past performance is not indicative of future performance. Any opinions and or recommendations expressed in this material are subject to change without notice and Banyan Tree is not under any obligation to update or keep current the information contained herein. References made to third parties are based on information believed to be reliable but are not guaranteed as being accurate.
Banyan Tree and its respective officers may have an interest in the securities or derivatives of any entities referred to in this material. Banyan Tree does, and seeks to do, business with companies that are the subject of its research reports. The analyst(s) hereby certify that all the views expressed in this report accurately reflect their personal views about the subject investment theme and/or company securities.
Although every attempt has been made to verify the accuracy of the information contained in the document, liability for any errors or omissions (except any statutory liability which cannot be excluded) is specifically excluded by Banyan Tree, its associates, officers, directors, employees and agents. Except for any liability which cannot be excluded, Banyan Tree, its directors, employees and agents accept no liability or responsibility for any loss or damage of any kind, direct or indirect, arising out of the use of all or any part of this material. Recipients of this document agree in advance that Banyan Tree is not liable to recipients in any matters whatsoever otherwise recipients should disregard, destroy or delete this document. All information is correct at the time of publication. Banyan Tree does not guarantee reliability and accuracy of the material contained in this document and is not liable for any unintentional errors in the document.
The securities of any company(ies) mentioned in this document may not be eligible for sale in all jurisdictions or to all categories of investors. This document is provided to the recipient only and is not to be distributed to third parties without the prior consent of Banyan Tree.
This document has been commissioned by Reach Markets Australia Pty Ltd and provided by Banyan Tree Investment Group (ACN 611 390 615; AFSL 486279) (“Banyan Tree”).