Less than a week ago, Affluence Corporation (OTC PINK: AFFU) stock was hovering around the $0.10 level. Today, they surged to $0.125. And when we first covered AFFU before its 23% surge, we included a message- timing is everything. That's still the case. Moreover, despite the valuation gap closing a bit after AFFU posted a doubling of Q3 comparative revenues, the share price still exposes a considerable disconnect between market cap and the intrinsic value of its portfolio assets. Investors should consider taking advantage.
After all, beyond the stock price disconnect, AFFU is undoubtedly in the right sector at the right time. Not only that, they present an inexpensive way to get exposure into the multi-billion dollar Edge Cloud, IoT, and 5G technology space. But, values don't last forever. And after AFFU posted a doubling in Q3 revenues last week, this one is tightening. Deservedly so.
That's because in addition to posting its highest quarterly revenue ever, guidance calls for more substantial increases to come, especially with demand at near-record levels for the type of IoT technologies Affluence offers. Better still, AFFU is far from a product company. On the contrary, they are diversified to take advantage of emerging needs in an IoT market that is still in its infancy. That broadening demand is leading to an expansion in each of AFFU's business segments, particularly at OneMind Technologies. In fact, OneMind is establishing a strong revenue-generating tailwind heading into Q1 of 2022.
Video Link: https://www.youtube.com/embed/3MJKLEhlW8s
Subsidiary Assets Blaze Revenue-Generating Trail
But more than a tailwind, they are helping to blaze a trail of robust and sustainable growth for its parent company, AFFU. Already, the innovative and scalable OneMind technology has been picked as the command and control software for one of the world's most notable Smart City projects.
More than picked, they have a signed contract in hand, have completed the final implementation processes, and expect to make a formal announcement about its transformational impact once its technology and service partners meet their own requisite requirements. Here's the best news: AFFU said to expect revenue recognition from the deal to start in Q4 of this year. But, even better, they expect to carry over a seven-figure product backlog into the first half of 2022. Consequently, on a comparative basis, revenues are on track to at least double again in the coming quarters. But, that's just from OneMind. Affluence has plenty more to offer its clients to drive value for investors.
Its acquisition of ISLP earlier this year ideally positions AFFU to capitalize on massive opportunities with the telecom services and specialized technologies space. Better yet, a poster success story curated by the Indian Institute of Technology (IIT) Incubator in Delhi, ISLP can uniquely build customized digital solutions for clients using cutting edge technologies, including blockchain, AI, Machine Learning, Business Intelligence, and Data Science. And AFFU is tapping into that value.
Currently, they are leveraging ISLP's ability to build and deliver fiber technology-based last-mile infrastructure and technology solutions to one of the largest telecom companies in Asia. Moreover, It's a near-term project, commencing in Q1 of 2022 with revenues hitting its books no later than Q2 of next year. Best of all, it's a project that can yield exponential growth for AFFU, with a funding term sheet in place for $40 million that is expected to be executed in the first weeks of next year. In addition, AFFU guided several additional acquisitions to close by the end of Q1, positioning itself to accelerate its growth trajectory sooner than later.
Accretive Growth Adds Momentum To Long-Term Strategy
Need better news? If so, know that from an operational perspective, AFFU is in its best position ever to shift its revenue-generating momentum into high gear. In fact, they recently strengthened that position after executing two global master product and services agreements with world-class organizations. The first international product distribution agreement already helped develop one major contract, with OneMind further quoting several additional projects for its 2022 business pipeline. The second agreement is a services agreement for its IoT and 5G technology product stack. Updates on how that agreement will impact near-term revenue streams are imminent.
As important as diversifying its offerings portfolio, Affluence has also made significant strides in cleaning up its balance sheet and capital structure. In 2021, AFFU successfully converted a substantial portion of its debt to equity, thereby eliminating some overhang in its capital structure. Those improvements are more than accretive to growth; they alleviate the sometimes artificial ceiling in place for micro-cap stocks like AFFU. Evidence of that top being raised is its stock's recent spike in price. Still, while an impressive move, especially over a four-day trading period, the value proposition remains compelling.
In fact, investors would be wise to consider the recent jump a precursor of better things to come. Keep in mind, despite its micro-cap size, AFFU is effectively competing against larger companies. And with its agile business structure, they are well-positioned to pounce on current and emerging business opportunities within a multi-billion dollar IoT industry expected to surge over the next decade. Even better, they are putting the pieces together to move its pace of growth from hyper to warp speed after announcing they're bringing another Industrial IoT solution to market through its pending acquisition of Saamarthya. How big is that deal? It's potentially transformational and puts AFFU deep into the game to benefit from a $7.6 billion biomedical waste market. But, there's more to like.
Affluence, and its OneMind Technologies, Inc. subsidiary, are currently seizing upon massive opportunities in a $9.2 billion Supervisory Control and Data Acquisition (SCADA) market by marketing the power of its innovative closed-loop process automation solution. And they have an excellent chance of earning market traction, especially with its Closed Loop Process Automation solution advancing a unique IoT technology that delivers unprecedented efficiencies and cost optimization in the manufacturing sector. Unlike many competitive solutions, OneMind provides real-time data acquisition, analytics, and instruction data feedback to the computer-controlled processes. To a layman, it sounds complicated. But to those in the sector, most importantly, clients, they understand that OneMind delivers next-gen technology to different markets that need it today.
Delivering Best-In-Class Solutions To Drive Growth
Not only that, AFFU believes they have a better solution. And so do many of its clients. Notably, AFFU's Industrial IoT solution is demonstrably unique by using a fully integrated and intelligent closed-loop solution versus the often incongruent automation patches in competing products. It also does much more than just collect data and operate devices; it utilizes the power of AI to analyze data and make decisions via a cloud-based environment. Best of all, OneMind solutions enable remote SCADA monitoring and control using ordinary tablets and smartphones. As a result, not only is it logistically superior, but clients are lining up to benefit.
Already, the technology is deployed at more than 70 Solar Power generation farms throughout India, the Middle East, and Asia. While that's excellent news for today, the better news is that AFFU recently highlighted that several new revenue-generating projects will likely start sooner than later. Those initiatives target opportunities at solar and wind power generation farms, machine components manufacturing units, and the pharmaceutical manufacturing industry. Don't forget, AFFU is making money on these services.
With its Industrial IoT - SCADA solution deployed as a Software-as-a-Service (SaaS) model, AFFU generates income from a one-time fee and an ongoing monthly charge expected to start at $10 per machine. Thus, a formidable revenue stream is forming, with the company expecting to place more than 50,000 machines in India alone over the next twelve months. Moreover, additional planned placements throughout North America and Europe next year make that revenue stream significantly stronger and, most importantly, sustainable.
Here's even better news from a forward-looking perspective. While AFFU is already making inroads in the $9.2 billion global SCADA market, assuming the projected CAGR of 7.6% is accurate, AFFU is penetrating a market surging toward $13.2 billion in less than five years. Know this, too. Despite the word "trillions" being thrown around the airwaves, a billion-dollar market is still significant for players who can meet quick demand changes. Hence, within an expected $13.2 billion market, opportunities for AFFU are massive and come with no shortage of demand from industrial clients needing mobility solutions for efficient process management.
Noting demand, there's a lot of it.
Subsidiary Assets Tap Into Enormous Demand
Earlier this month, AFFU announced that OneMind entered an agreement with ISLP Technologies to provide software solutions for ISLP's Smart City projects in India. Moreover, they expect the deal to substantially increase the power behind OneMind Technologies' growth. In fact, they believe it will have an extremely positive impact on 2022 revenue. Considering that ISLP Technologies already has working agreements with prominent Indian Telco companies that should expedite new product rollout in cities across India, that's likely. Also, the targeted opportunities are not one-size-fits-all. Instead, differences in client need position OneMind to promote its entire suite of smart city software products to a large and growing client base.
OneMind was chosen for good reasons. According to ISLP Technologies CEO, OneMind brings with them a history of being already included in the world's largest Smart City project in the Middle East. Secondly, OneMind is strengthened by partnerships with one of the world's leading technology companies and one of Europe and Asia's largest professional services organizations to assist in project implementation. Thirdly, ISLP noted that the OneMind product stack is flexible, meaning it's easy to expand into other applications such as smart airports, smart hospitals, and smart construction. So, for good reasons, the diversified strength of OneMind can become a catalyst for AFFU stock once its new programs get fully implemented. Target date, early 2022.
More Assets, More Value, Breakout 2022
There's another value kicker as well. Contributions are coming from other acquisitions, including RAS Engineering PA, a telecom infrastructure engineering and design services organization that provides the critical design work needed for telecom construction projects and site plans. It's a niche company, but a good one, offering A/E design, code compliance, building performance testing, quality control testing, commissioning, measurement & verification, special inspections, and consulting services. While not on the front lines of revenue generation just yet, keep an eye on it during the coming quarters. It, too, should benefit from soaring market demand.
Thus, even after a 23% run, a sum calculation of its assets keeps AFFU stock more than attractive; it's a compelling value proposition. Moreover, a deep dive into the company shows there is a lot to like that markets have yet to discover. They have best-in-class assets, are penetrating multiple global markets with best-in-class IoT solutions, and are selectively acquiring companies to expedite its mission to become EPS positive in the coming quarters. Of course, while bottom-line EPS could take AFFU from pennies to dollars quickly, investors should consider that milestones reached along the way can add considerable value as well. So, at about $0.11 per share and with several announcements expected in the coming weeks, including a potential $40 million one, AFFU looks locked and loaded for more appreciation. And its 23% increase last week may be sending that message.
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