Embark Value, page-10

How do you know they are only chasing those monsters?

The company has never mentioned China in any capacity and mention of an upcoming trial in NYC, last heard in Oct, has seemingly gone nowhere. As you highlighted, its largest cities, not largest metro networks, there is a difference. Cities I mentioned are some of the largest in the continent

The absolute size of the network is not as important as you think, screens only go in stations where throughput is above certain thresholds, thus even in networks that have 200 stations and 100kms, you'll find screens will only go in in 5 or 10 or 15 or so. Some of those networks like Seoul, Tokyo and others run trains every two to three minutes in peak times which cuts the loop length for ads which is actually negative for screen economics. Dehli is more compact then some of those but still does 2.5m trips a day, Singapore is more compact but its ridership levels are very high and ranks 15 overall globally. Cities like DC and Boston have ridership levels comparable to Sydney, however they are more compact with greater throughput in central underground stations, thus offer better economics and a larger deployment to what was achieved in Melb/Bris and what APO has in Syd. Nothing to be balked at or avoided by the company in he hopes of landing the big fish.

One thing you are also forgetting is what are the current contracts in place with the existing media providers in these cities. JC Decaux holds the contracts with those Chinese cities and will be hesitant to let XTD cut in, same with the two media groups that hold the contracts across the better US networks. These were issues which the company highlighted when I asked them about what the challenges were for breaking into other networks, particularly in networks who have had longstanding relationships/contracts with existing media providers. To get into Melbourne took a few years and a re-tender from the rail operator. It will take much longer to deal with a major network like the ones you've mentioned.

My understanding is that the company is targeting the cities which networks which present the best economics for setting up screens, which doesn't mean the absolute largest ones, and places where existing contracts and relationships (rail and media) can be leveraged.

From a capital allocation standpoint, as XTD has to front the cost of screens in a deployment, a few smaller or mid-sized networks are more capital efficient to roll out and once a few have been set up and are spitting out cash, scoring a large network will be more palatable as it can be funded from higher CF levels and borrowing capacity, ultimately being significantly less dilutionary to existing shareholders.


If none of this has crossed your mind, nor if you haven't asked the company about what their strategy is for targeting and dealing with networks, then you need to try a little harder than doing a google search for metros with highest ridership. Here is a single link that does for the 5 you posted plus some.

https://en.wikipedia.org/wiki/List_of_metro_systems