CyanConnode Holdings: Insider Confidence Meets Undervaluation Potential

CyanConnode Holdings (LON:CYAN) operates at the intersection of smart energy infrastructure and insider confidence, positioning itself as a key player in India's smart meter rollout. With a growing order book and strategic contracts, the company has attracted significant insider buying activity, particularly from its Executive Chairman John Cronin. This article explores how CyanConnode's undervalued valuation aligns with its insider-driven optimism, presenting a compelling investment case for contrarians.

Insider Buying: A Vote of Confidence in Turbulent Times

Over the past year, CyanConnode's insiders have demonstrated remarkable conviction through share purchases. The most striking transaction occurred on September 25, 2024, when John Cronin bought 315,689 shares at £0.95 each, totaling £2.999 million—a transaction explicitly classified as “informative,” signaling personal investment. This purchase alone accounts for 99.9% of total insider buying over the last 12 months, underscoring Cronin's belief in the company's long-term potential.

While smaller purchases by CFO Heather Peacock and non-executive director William David Johns-Powell add to the narrative, the bulk of activity stems from Cronin's leadership. Notably, no insider selling has occurred in the past 12 months, and recent institutional activity—such as Doxa Partners LLP's increased holdings—suggests external validation of CyanConnode's undervaluation.

Fundamental Catalysts: Order Book Growth and Strategic Contracts

CyanConnode's fundamentals are bolstered by its £180 million order book as of March 2025, a 260% increase from £50 million in early 2024. A £70 million deal with Goa's government—a cornerstone of India's AMISP (Advanced Metering Infrastructure System Programme)—pins CyanConnode as a critical supplier in a sector projected to expand to 330 million smart meters by 2030.

Despite short-term headwinds—such as delayed shipments in FY25 due to Indian elections and consumer resistance—the company's April 2025 shipments of 350,000 Omnimesh modules (a 900% jump year-on-year) signal recovery. The recent US$7.5 million convertible loan note from Smart Sustainability Solutions further strengthens liquidity, with proceeds earmarked for working capital and capital expenditures.

Valuation: A Discounted Play on Smart Metering Growth

CyanConnode's market cap of £20 million (as of June 2025) pales in comparison to its £180 million order book, implying a P/S (price-to-sales) ratio of just 0.11x. For context, peers like Landis+Gyr (LON:LGYR) trade at P/S ratios of 0.6–0.8x, suggesting CyanConnode is undervalued by 80–85% on a relative basis.

The company's cash position of £5.8 million and £14.2 million received from customers in FY25 provide a runway to execute on its order backlog. Even with an EBITDA loss in FY25, the order book's deferred revenue potential positions CyanConnode for margin expansion as shipments scale.

Technical Setup: Support Levels and Breakout Potential

CyanConnode's stock has been range-bound between £0.10 and £0.20 since late 2023, with resistance at £0.22–£0.25. Recent trading near £0.12–£0.13 aligns with key support levels, while volume spikes in late 2024 (coinciding with Cronin's buy) hint at institutional accumulation.

A break above £0.20 would target the £0.25–£0.30 resistance zone, which could catalyze momentum if order book wins or shipment milestones materialize.

Risks to Consider

• Execution in India: Regulatory delays or consumer adoption issues could prolong near-term losses.
• Competitor Pressure: Established players like ABB Ltd. or Schneider Electric may undercut margins.
• Valuation Sensitivity: A downgrade in order book visibility could trigger a selloff.

Investment Thesis

CyanConnode presents a high-reward, high-risk asymmetric opportunity for investors willing to bet on its execution in India's smart metering boom. Key catalysts include:
1. Accelerated shipments to meet Goa's £70 million contract.
2. New AMISP tenders in states like Maharashtra or Tamil Nadu.
3. Margin improvement as scale benefits reduce per-unit costs.

Recommendation:
- Buy: 25% allocation at current levels (near £0.12).
- Target: £0.25–£0.30 (100–150% upside).
- Stop Loss: £0.09 (20% below entry).

CyanConnode's insider-led buying and undervalued order book position it as a contrarian bet on India's energy transition. While risks are present, the alignment of Cronin's conviction with the company's strategic tailwinds makes this a compelling story for investors with a 12–18 month horizon.