DALLAS, TX -- May 31st, 2023 -- ProStar Holdings Inc. (OTCQX: MAPPF): Stonegate Capital Partners updates coverage on ProStar Holdings Inc. (OTCQX: MAPPF). The full report can be accessed by clicking on the following link: MAPS Q1 23 Report
Company Summary
- Expansion Is Leading to Revenue Growth: As noted below, ProStar has continued to gain significant transaction among DOTs. This expansion in the customer base is turning into significant growth on the income statement, with the Company generating revenue increases of 55.7% quarter over quarter and 22.4% year over year. We view this as one of the first signs that the groundwork ProStar has laid will continue to translate into tangible financial results.
- Technology Update: Recently ProStar was approached by CDOT to explore the possibility of using PointMan to close out 811 tickets in the field. When major new construction is permitted, prior to digging, general contractors must close out any open 811 tickets requiring them to take preliminary measurements, proving to regulators (i.e., CDOT) that they know where subsurface infrastructure is located. Closing 811 tickets is a lengthy process that often results in fines due to the manual nature of the workflow. ProStar has completed development of a new feature that allows contractors to close out 811 tickets digitally in real time and onsite. This new feature is easily rolled out to other states.
- Gaining Traction Outside of Colorado: Earlier this year the Company announced that the City of Weslaco, TX adopted PointMan to manage its utility systems. This win shows that ProStar is continuing to expand its partnerships with municipalities nationally. As more states and municipalities review their budgets and begin overhauling their infrastructure, we anticipate these contract wins will become more frequent. There have also been recent contract wins with companies in Australia and Canada, showing that MAPPF is beginning to gain traction globally.
- Management Remains Busy: Management continues to meet with numerous Department of Transit personnel across the country. Building on the above point we note that CALTrans, NYCDOT, and PENDOT are among a few of the many transportation departments that have expressed interest in PointMan. Leveraging the Company’s strong execution seen in Colorado, we expect significant domestic contract wins to be announced over this year. Should these wins be announced, it would represent a significant boost to ProStar’s financials and valuation.
- What’s next: We think it is reasonable to expect further state DOTs to sign up in the next 12 months, significant expansion of the customer base, including further penetration into its existing customer base and increased visibility of the product as PointMan gets adopted as the solution to map out infrastructure. Given the current contract wins with companies like Impulse Radar, we see a clear path for ProStar to add more hardware providers to the partnership list. We expect this to be followed closely by integration of ProStar software within their partners hardware.
- Valuation – We use a comparative analysis to frame valuation. Using an EV/Sales range of 5.0x to 8.0x with a midpoint of 6.5x, on the Company’s F24 revenue projection, we arrive at our valuation range of US$0.24 to US$0.37 with a mid-point of US$0.30.
About Stonegate
Stonegate Capital Partners is a leading capital markets advisory firm providing investor relations, equity research, and institutional investor outreach services for public companies. Our affiliate, Stonegate Capital Markets (member FINRA) provides a full spectrum of investment banking, equity research and capital raising for public and private companies.
