How to invest in the emerging field of ‘geospatial analytics’
Link copied to
Geospatial analytics is an emerging investment opportunity for ASX investors, says Marc Kennis of TMT Analytics.
What is geospatial analytics and what is driving demand?
The improvements in technology have changed the way we view the world and now 3D imaging is a vital tool for everything from construction companies to oil and gas or government and insurance agencies. Imaging can come in aerial form or in a point cloud, a three-dimensional coordinate system intended to replicate an object or space.
The availability of wider data has led to greater efficiencies in tasks like the building of roads or surveying and new developments are leading to a greater ease of use.
The problem is that the legacy files of a lot of companies are so large that they have been hard to work with historically. Large companies have tonnes of data which can be as big as gigabytes or terabytes but it can be hard for older computers to render on screen. New solutions are paving the way for full accessibility.
As we get faster computers and better software the technology is allowing engineers to access 3D point clouds on the go, view complex maps on smartphones and allow for greater detail.
Where are we seeing the growth in geospatial analytics?
Across a variety of industries, geospatial data is used to take stock of tenements for oil and gas, for surveyors to capture an area or simply for council workers to build a road.
We are seeing significant efficiencies brought about by new technologies where the data can be readily available on a smartphone or tablet and where users can easily zoom in and out and change viewing angles as opposed to traditional viewing methods on desktops.
How are the players in the ASX different?
There are three main players in the geospatial analysis space on the ASX:
Nearmap (ASX:NEA) were the first to come on board and fly planes to survey a particular area for clients. They upload that information and then make it available to corporate customers and consumers but there is a significant cost to capture.
Spookfish (ASX: SFI) has expanded on that with aerial data sourced from the planes of their US partner to provide a variety of maps. At this stage they deal mostly with the view from above, but the costs of flying their own planes is significant.
Pointerra (ASX:3DP) is different again because it is a platform to store, manage and access 3D laser imaging data that makes it easier to manage and render 3D point clouds – there is no one out there doing the same thing. Rather than collecting it themselves like other players, 3DP holds it in the cloud for others to use. They refer to themselves as being the “getty images” of 3D data by taking something that is cumbersome and making it easy to access.
Is there enough demand for all three to succeed in their commercialisation phase?
The feedback from industry is telling us that there are a whole bunch of other players that will be interested in some level of geospatial analysis – whether that is the companies that provide hardware for laser scanning or the agencies and software companies who are using the data themselves.
The difference is in the model by which each company generates its revenues and how much they will burn through in operations. 3DP’s model is very collaborative rather than competitive and the company has a very low cash burn compared to other tech companies that are in the early stages of monetisation.
Are retail investors apprehensive to invest in tech stocks if they don’t fully understand how it works?
Your average investor needs to start with research on what is happening on the market but it can be a challenge for tech companies because people are more likely to stick with the stocks they know like resources or banks.
They are looking for familiarity and a way that they can relate to stocks – in this space we refer to Pointerra as being a part of the typical cloud model that uses subscription services. While many investors may not be familiar with the survey aspect or 3D imaging, the broader concept makes it easier to digest.
Marc has two decades of institutional equities research experience in the Technology and Telco sectors, servicing clients in the UK, Europe, North America and Australia. He is passionate about the TMT space, with interests ranging from electronics and leading-edge hardware to newly emerging content delivery models, such as OTT, as well as cyber security, Artificial Intelligence and computer gaming.
In 2016 Marc founded TMT Analytics, providing independent equities research on companies in the Tech, Media and Telco sectors.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.