1. Alcidion Group Limited (Recommendation: Speculative Buy, Market Cap: $138.7 Mn)

Significant Increase in Recurring Revenue: Alcidion Group Limited (ASX: ALC) is primarily engaged in the development and licensing of its own healthcare software products, including Miya, Patientrack and Smartpage.

• During FY20, the company reported revenue growth of 10% to $18.6 million, despite the impact of COVID-19. Recurring revenue for the year went up by 35%, backed by significant investments for growth in UK and ANZ markets. At the end of the year, the company remained well-capitalised, with a cash balance of $15.9 million.
• Debt Scenario: As on 31st December 2019, the company had total debt of $0.41 million, with cash and short-term investments of $17.16 million.
• Overview of Financials/Fundamentals: In FY20, the company had a current ratio of 2.15x, as compared to the prior year period ratio of 0.60x. Over the past 5 years, the revenue of the company has grown at a CAGR of 60.0% (FY16-FY20). The company has a favourable capital structure with a debt to equity ratio of 0.01x in FY20.

A Pictorial Presentation of Key Financials:

SWOT Analysis:

Stock Recommendation:

• The stock of the company has corrected by 15.15% in the last 3 months and is currently inclined towards its 52-week low of $0.097 and has a support level at ~$0.13 and resistance levels at around $0.16 (on technical analysis front).
• During FY20, the company reported a significant growth in recurring revenues and seems to be well-positioned for future growth, with a decent pipeline of potential business.
• On a trailing twelve months (TTM) basis, the stock has a Price to Book Value multiple of 4.5x, lower than the industry average of 7.1x.
• Key Risks: COVID-19 disruptions; delay in contract delivery; foreign currency risk.
• Considering the growth in recurring revenues, significant contracts signed during FY20, decent balance sheet position, a decent pipeline of opportunities, support and resistance levels on technical analysis basis, and key risks associated with the business, we give a “Speculative Buy” recommendation on the stock at the current market price of $0.145, up 3.571% on 28^th August 2020.

2. NetLinkz Limited (Recommendation: Speculative Buy, Market Cap: $118.15 Mn)

Entry into New Markets: NetLinkz Limited (ASX: NET) is a provider of secure and efficient cloud network solutions. The company is witnessing increasing demand for its VSN platform, which led to solid growth in the June 2020 quarter.

• During the quarter ended 30^th June 2020, the company reported a Q-o-Q increase of 195% in adjusted customer receipts, which stood at $3.1 million. Demand for the VSN platform expanded in China, with China generating $2.6 million receipts with Q-o-Q growth of 147% on an adjusted basis. Moreover, the company continued to sign contracts and expects ~$15 million in customer receipts for CY2020.
• Debt Scenario: As on 31^st December 2019, the company had cash and short-term investments amounting to $14.48 million and total debt of $11.7 million.
• Overview of Financials/Fundamentals: Current ratio for the first half stood at 1.22x, as compared to the pcp ratio of 0.05x. Asset to equity ratio for the half stood at 5.59x.

A Pictorial Presentation of Key Financials:

SWOT Analysis:

Stock Recommendation:

• The stock of the company gave positive returns of 27.27% in the last three months and is currently inclined towards its 52-week low of $0.035 and has a support level at ~$0.05 and resistance levels at around $0.076 (on technical analysis front).
• During the June quarter, the company reported a solid performance on the back of a rapid increase in demand from China. Customer receipts increased significantly on the previous quarter and are expected to rise further in the near term.
• Key Risks: Foreign currency risk; Bilateral tensions with China; Risk of delayed growth in the new market due to COVID-19.
• Considering the recently signed MSA, growth in customer receipts, continued traction for VSN, support and resistance levels on technical analysis basis and key risks exposure, we give a “Speculative Buy” recommendation on the stock at the current market price of $0.060, up 7.143% on 28^th August 2020.

3. ResApp Health Limited (Recommendation: Speculative Buy, Market Cap: $94.39 Mn)

Accelerated Marketing of Products in New Markets: ResApp Health Limited (ASX: RAP) is a leading digital health company developing smartphone applications for the diagnosis and management of respiratory disease.

• During the quarter ended 30^th June 2020, the company achieved a significant set of milestones and now has two products in the market generating revenue. These products, namely ResAppDx and SleepCheck, have witnessed an encouraging response from users. The company is also planning to launch a national marketing campaign for SleepCheck.
• Debt Scenario: As on 31st December 2019, the company had total debt amounting to $0.39 million, with cash and short-term investments of $3.9 million. As on 30^th June 2020, the company had a cash balance of $5.8 million.
• Overview of Financials/Fundamentals: In 1HFY20, the company reported a decent liquidity position, with a current ratio of 2.62x. Debt/Equity ratio for the period stood at 0.08x.

Pictorial Presentation of ResAppDx Targets Multiple Market Segments:

SWOT Analysis:

Stock Recommendation:

• The stock of the company has corrected by 26.47% in the last three months and is currently inclined towards its 52-week low of $0.055 and has a support level at ~$0.069 and resistance levels at around $0.146 (on technical analysis front).
• The company is targeting to expand its offerings into new markets and is focused on developing products to attract new users.
• Key Risks: Foreign exchange risk; Delays in evaluation; Liquidity risk.
• Considering the performance in the June quarter, ongoing developments, plans in the pipeline, key risks, support and resistance levels on technical analysis basis, and current trading levels, we give a “Speculative Buy” recommendation on the stock at the current market price of $0.125 28^th August 2020.

Comparative Price Chart (Source: Refinitiv, Thomson Reuters)

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