I came across Pointerra Limited (ASX:3DP) in late 2015 when the company was trying to list on the ASX through an RTO (Reverse Takeover). The business is a platform that stores and allow utilisation of 3D data over the internet. The platform also allows 3D data visualisation for users. In my opinion, it is the only and best 3D company on the ASX.
To simplify the story, currently, there is no easy way to handle 3D data due to the large file sizes. The complexity of 3D data has always been an issue for users wanting a cloud experience. Pointerra’s technology allows users to use their real-time dynamic web viewing tools for simple access to their data from any device in any location. Users retain control over their data with the ability to make it public or to monetise for themselves through Pointerra’s secure transaction system.
How Does the Business work?
It’s quite simple. The business deals with 3D data instead of the flatter 2D format structure. In another past life, I was heavily involved in asset management for most of the major local governments in Perth, Western Australia. So I am very comfortable with what the company is trying to achieve. In those days, early 2000, the applications for 3D data today was virtually non-existent, and if it were, it was definitely in its infancy stage.
Today we have AR (Augmented Reality) and AI (Artifical Intelligence), and companies such as Google now want to use 3D data to complement the Google map experience. Have a look at the news on Google Earth. There are companies all over the place now that deal only in 3D data. It is no longer something that is a futuristic application.
If you look at the businesses such as Tensor Flight, you cannot help but think that the 3D data world is only just starting. When you have 3D data to millimetre precision, you can do a lot with the information. You are talking about survey quality datasets. As a geologist, when we were using handheld GPS in the field, we were looking at 1-2m errors. These days, the handhelds are doing centimetres to millimetres, depending on coverage and allowing for correction. What this means for the geologist is that we do not need to send surveyors out into the field and hence saving money.
In the world of engineering, it started with manual labour using laser scanners to capture the 3D information. Now we have drones and Google. Companies such as Rio Tinto now consistently updates their 3D data for its internal uses. When Google collects data for its purposes such as Google maps, they collect 3D datasets as well. The 3D datasets were not well used because no technology was able to handle the logistics. This missing technology is where Pointerra comes into the picture.
When you look at Figure 1, it is a very simple Business Model. Data is captured or given, uploaded into the system (cloud-based), and you use it. The user has the choice of using the dataset for its use and also the option to sell that dataset to its customers.
How Does it Work, Who uses 3D data?
Everyone. That may seem unlikely to the everyday person, but I keep coming back to this digital world. What people need to understand is that when they look with their eyes, they see everything in 3D. That is how our brain works instinctively. When we look at a 2D map, we have to make an effort to process what we see which means that it is easier for a human to interpret 3D view than that of a 2D format.
Hence, the digital life that we are going to live in will need 3D data. Whatever we use to view it will need to be allowed to process and visualise this information smoothly and seamlessly. The system will need to be able to be used anywhere and on mobile devices.
Therefore, if you understand the uses of high-resolution aerial photography and tools such as google maps, you will be excited about the endless possibilities of 3D information.
There are two main parts to this understanding,
Storage
The user’s visualisation of the data.
The capturing of the data is the simple part.
Business Model
In Figure 2, you can see that entire business and potential income streams for the company. Just so that I put the potential into context, construction of a building, or a refinery or a bridge will be so much easier to visualise in 3D. Like when high-resolution photography came into play, it was terrific. For example, when I was using the high-resolution photography for collecting information for asset management. I could see the paving tiles enough to measure it.
When you use 3D data, it is not just the visualisation; it’s the ability to calculate things on an engineering accuracy scale. Pointerra claims that they can provide users with the ability to do all these things. Think of the utility companies and the miners such as Rio Tinto and BHPs of this world doing the uncrewed dump trucks and trains. They would need to know in 3D, every millimetre of any scenario of their working environment.
What is the Technology?
I will declare at the outset that the detailed understand of the technology to me is unfortunately not my strength.
What I do know is that there seem to be a lot of people out there that understand it and are making enterprise agreements with the company. Autodesk is one of them and that, to me, speaks volume in this part of the industry. A giant like Autodesk is a fantastic endorsement. Pointerra’s patent-pending technology is best summarised in Figure 3, outlining the multiple facets of how things work.
What’s the Attraction?
If you believe the sales pitch that Pointerra is telling the investor world that there are no competitors out in the marketplace, you will start to see the myriad of income streams (Figure 4). As we continue to live in a world of AR and AI, you can imagine that the use of 3D applications will have no end. With the onset of 5G, the use of large data format will become more accessible and more widespread. For example, take the virtual shopping of Alibaba, the use of AR to showcase engineering products such as shipbuilding, large infrastructure projects such as railways, construction of power grids, the study of sun shadows for large urban developments… etc. All of these will require the precision survey and the use of 3D data in applications will be the norm rather than the exception.
It is a bit bewildering to think that there is an endless use for 3D data. From a geographical, technical background, I understand that the use of mapping is critical in everyday use. The commercial world needs to understand maps to make money. Think about how Uber is to survive if they don’t have a master on maps. How would companies such as Westfields decide where to put their shopping centre and what content will they need in those centres without maps to tell them population densities, spending habits, age distributions etc.
In the City of South Perth, they are running a driverless bus. You would wonder how does that bus know where to go, how to go…etc without the third dimension information. In my opinion, the use of 3D data is now just being accessed by users. Figure 5 below gives a general understanding of some near-term application for the products that Pointerra can provide at the moment.
The People
I remember when I was at the launch of the RTO, I was listening to the presentation and I was immediately impressed with the fact that the core people are all in the industry. If you look at the team behind the company, they are the people who helped Rio Tinto build the technology to be able to drive a dump truck remotely. They were involved in the technology to capture and apply 3D data in pit surveys. Just remember that to have a truck drive uncrewed, you need exact data. Now if you are a company that lives in this world, you want your team to be vested in the business. The founders of the company are part of the main shareholding.
To me, this is critical. If you have the best technology and the people working it has no interest in the well-being of the company, you will have a problem.
What is in it for the Investor?
The investor is only really interested in the capital growth of the company. The capital growth of the share price is the only requirement for all things commercial, $$$.
As of the 28th September 2018, the share price of the company is not too far from my exit in the stock 18 months ago. It went for a rally in late 2017 on the back of the announcement of the Autodesk relationship, but it has since dived (Figure 6). However, I believe that the new reports on the new income stream have put the company on a good momentum upwards.
I re-entered the stock late 2017 after the announcement of Autodesk as I felt this was a journey in the right direction. Unfortunately, the decline has meant that I have been averaging down :-). I will say that this is a stock that, fortunately, or unfortunately (time will tell), I believe the darn story. Having been in the mapping industry for the last 25years + as a geologist and a local government consultant in asset management, I can see the potential of the business. I was a big user of GIS (Geographical Information Systems), so I appreciate digital maps and the wonder of seeing things in 3 dimensions.
Peer Comparisons
At these prices, the Market Cap of the company is around the AUD20M mark. If you look at the closest comparison on the market, Nearmap, you have to wonder if there is a lot more growth. The last time I looked at the Market Cap of Nearmap, it was almost 800M. It may be of interest to people that Robert Newman, who is the Managing Director and CEO of Nearmaps, is also a Non-Executive Director of Pointerra. If you want a vote of confidence on the business, that has got to be one. Remember that Nearmaps was once at these early stages.
When I look at Nearmaps and what they are doing, I cannot help myself to think that the flat structure (2D data) cannot compare with what Pointerra is offering. The difference is market awareness and proof of concept. Nearmap has a great product, and they are doing well, and I think the high-resolution game has a market.
Pointerra will be valued at those levels when the proof of commercialisation begins to filter in from the marketplace. The last few announcements are already giving some signs, so fingers crossed.
Another thing, I don’t think Nearmap has made any money yet, and they have a Market Cap of 800M. Think about that concept. A few months ago, Nearmap raised AUD$70M at AUD$1.70.
My Concerns
The company does not get this message out to the commercial world.
They run out of money before delivering the message. A capital raise at these prices again would not be good for the existing shareholding.
With such a great story, why are there not more buying into the stock?
In their latest Annual Reports, a few Non-Executive Directors are being paid a decent salary- from a chainaman standard; the amount is decent :-).From experience, many NEDs don’t do anything and are handsomely paid that would add to the cost of doing business. However, if they are doing things, then that is a different story.
Conclusion
Pointerra, in my opinion, is going to be a great story. The technology is fantastic and assuming that they can fend off any competition, this will be a tremendous journey.
Think about what it means to be able to have precision 3D data that is available to everyone. If you appreciate the use of 2D maps such as those that are being used in Google Maps and used by Nearmaps, what could the possibilities be with one extra dimension?
I hope you appreciate my thoughts and enjoy the read.
Samso Declaration
I am currently a shareholder of Pointerra (ASX:3DP)
The purpose of this piece of writing is not to sell Pointerra shares.
I have not been paid by anyone to write this article.
It is also not to convince the reader to buy the shares.
I just thought it is an excellent story to share.
Samso is all about sharing thoughts and ideas.
NOTE:
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