Stonegate Capital Partners Updates Its Coverage on ProStar Holdings Inc. (MAPS)
November 21, 2022
TSX Venture Exchange
Trading Symbol: MAPS
Trading Symbol: MAPPF
ProStar® Holdings Inc is a digital mapping company that offers survey grade measurements in the field on a mobile phone/device. The Company enables Fortune 500 companies in construction, utilities, railways, engineering, and surveying firms to map out their underground (and above ground) assets with the goal of eliminating utility strikes (i.e. avoiding accidental damage to underground utility assets). The flagship product is PointMan®, a patented cloud and mobile data management system that saves customers costs, increases productivity, and leaves them with an asset: a survey grade digital map of assets below surface. Prostar is headquartered in Grand Junction, CO.
- Patented mapping software – The Company’s precision mapping solutions deliver the underground location with 1 cm accuracy of critical utility and infrastructure data. This pevents damage to critical underground infrastructure from accidental damage during construction and maintenance. The technology enables up to 1 cm accuracy and is seamlessly integrated with receivers and pipe locators including Trimble, 3M, Juniper, Bad Elf, Emlid, RadioDetection, and Vivax.
- Addition of key contributors – in 3Q22 MAPP.F added a key member to their executive team in Matt Dragon. As a professional Matt has a 20-year track record of technical sales experience, which will be leveraged to recruit, coach, and grow the sales team in order to drive revenue. Most importantly, this is a strong signal from ProStar that they are seeing increasing demand for their products and have reached a point where they are ready for a more deliberate go to market strategy. The timing of this hire corelates with the expected growth seen on page 4.
- Significant market opportunity – The passing of the $1.2 trillion Infrastructure Investment and Jobs Act is likely to provide an impetus for growth in the construction industry for years to come. Per the September 2019 DIRT report, nearly 500,000 accidental strikes on critical sub-surface infrastructure like fiber optic cables cost the economy over $61 billion annually in damages and repairs. ProStar is positioned as a first mover to capitalize on opportunities in the construction, engineering, and O&G segments, as well as with regulators.
- Growing customer base – ProStar’s marquee customers include Colorado Department of Transportation, which mandated the use of ProStar’s™ PointMan software effective January 14, 2021. Prominent customers include Kiewit, Colorado DOT, T2, Water Works, Landmark, Utility Mapping, Kokosing, KCI, Scout Energy, Compass Data, HKS, and numerous others with more to come as the company’s sales force matures.
- Regulatory greenshoots become visible – The American Society of Civil Engineers published ASCE 38-22 which effectively says that surveyed paint marks are no longer acceptable as survey grade data. This paper was worked on for 3 years before being published in July and it outlines the guidelines for legislators to adopt, with the goal of minimizing utility strikes to zero over the coming years. PointMan provides survey grade measurements in the field on a mobile phone—which severely disrupts the existing manual workflow. Ultimately, local, state, and federal legislatures are expected to enact legislation similar to Colorado that mandates survey grade measurements on a digital platform.
- What’s next? Expect another state DOT to sign up in the next 12 months, significant expansion of the customer base, including entry into the mining vertical, and more visibility of the product as PointMan gets adopted as the solution to map out infrastructure. It is logical for electromagnetic wand manufacturers to partner with Pointman. There could also be potential for a licensing deal with one of the numerous companies that could benefit from the use of Prostar’s patents.
- Valuation – We use a comparative analysis to frame valuation. Using an EV/Sales range of 2.5x to 4.5x with a midpoint of 3.5x, on the Company’s F24 revenue projection, we arrive at our valuation range of US$0.26 to US$0.44 with a mid-point of US$0.35.
Stonegate Capital Partners is a Dallas-based corporate advisory firm dedicated to serving the specialized needs of small-cap public companies. Since our inception, our mission has been to find innovative, undervalued public companies for our network of leading institutional investors who seek high-quality investment opportunities.
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