Sydney, Aug 2, 2018 AEST (ABN Newswire) - Scout Security (ASX:SCT) has signed a partnership deal with Stanley Black & Decker, Inc. ((NYSE:SWK), 'SBD') to license Scout's home-security platform and hardware suite. A Fortune 500 company with a current market capitalisation of approximately US$22 billion, SBD is also the world's largest power tool and storage supplier, and the second largest provider of security services globally. Highlights of the announcement include the following.
- SBD to license and sell Scout's home-security platform.
- The partnership grants SBD the right to deploy the Scout software platform and hardware suite across its brands and security business units globally.
- The combination of Scout's platform and SBD's offerings provides numerous near- and long-term opportunities in both residential and commercial security.
- Work on establishing a commercial offering begins immediately, with SBD purchasing a block of prepaid licenses for AU$408,000 (US$300,000).
Analyst comment: this is a complete game-changer for Scout.
While SBD is best known in Australia for its range of high-quality power tools, many remain unaware of its status as a Fortune 500 company with a market capitalisation of around US$22 billion. Indeed, SBD is the leading provider of power tools and storage solutions globally and also - and more relevantly for the Scout partnership - the second largest provider of commercial electronic security solutions worldwide.
That said, to date SBD's security solutions have encompassed largely commercial, hard-wired options. The Scout partnership, then, provides SBD with a quick, turn-key solution, allowing it a rapid move into the retail-focused, DIY home-security sector as early as 2019.
Not surprisingly, given the size of SBD, a number of key terms of the partnership remain confidential. However, the initial upfront licensing fee does signal SBD's commitment to the relationship.
The partnership involves SBD 'white labelling' Scout's hardware and software solutions to sell as its own products around the world. Given SBD's unrivalled distribution network, the short- and long-term impact on Scout's sales, and thus profitability, are likely to far exceed all previous expectations. We look forward to further information on this partnership being released in coming months.
Valuation: despite the likely positive impact of this partnership on the company's long-term profitability, we maintain our valuation of Scout at $0.94 /share (share price $0.18/share), but will review it as more information on the Scout/SBD partnership is released.
To view the video, please visit:
About Scout Security Ltd
In February of 2013, Scout Security Ltd (ASX:SCT) launched an independent crowdfunding campaign to pre-sell its devices. Within 30 days, Scout exceeded its goal. Since then, over $500,000 worth of systems have been sold. Scout was possible because of people like you - backers who shared a common problem and common vision. Our customers gave this company its start and their needs are what drive our company daily.
Scout's mission is to create a home security system that is smart, simple and affordable. It sounds deceptively easy. But, with thousands of connected home devices popping up each year, deciding what devices should go in your home is complicated. Not anymore. As a customer of Scout, you're going to get a thoughtful, curated home security experience from end-to-end. No nonsense, just a modern home security system for a modern home.
About The Sophisticated Investor
The Sophisticated Investor is a new equity investment tool which seeks to assist investors in becoming more informed in their investment decision making. We show and tell investors about a company in a series of short, informative videos. We possess specialist equity analyst skills and are complemented by video professionals. We conduct site visits and interview management, in a way most investors simply aren’t able to access. We promote long term value creation for investors by employing detailed financial analysis and intrinsic value calculations.
Adam Kiley trading as The Sophisticated Investor ('TSI'), (AR No. 458224), is an authorised representative of Intelligent Financial Markets Pty Ltd (AFSL No. 426359). The information contained in this communication is intended as general advice only. Your personal objectives, financial situation and needs have not been taken into consideration. Accordingly, you should consider how appropriate the advice is (or is not) to your objectives, financial situation and needs before acting on the advice. The information in this communication should not be the only trigger for your investment decision. We strongly recommend you seek professional financial advice whenever making financial investment decisions.
Conflict of interest
TSI does and seeks to do business with companies featured in its articles and videos. As a result, investors should be aware that TSI may have a conflict of interest that could affect the objectivity of some articles or videos. Investors should consider TSI articles and videos as only a single factor in making any investment decision. The publishers also wish to disclose that they may hold stock in some companies featured in their articles and videos, and that any decision you make to purchase the stock of a company TSI profiles should be made only after you have initiated your own enquiries as to the validity of any information contained in those articles and videos.
TSI will only initiate coverage of a company that passes our internal investment checklist. Once a company has passed this checklist, we will initiate coverage of that company and follow up with ongoing updates and commentary on its activities. Articles and videos produced and published by TSI are NOT Research Reports in terms of ASIC Regulatory Guide 79.