Stocks’ Details
Mach7 Technologies Limited
Completion of Acquisition: Mach7 Technologies Limited (ASX: M7T) provides imaging data sharing, storage and interoperability for healthcare enterprises globally. The market capitalisation of the company stood at ~$220.54 million as on 28th October 2020. During Q1 FY21, the company has wrapped up the acquisition of Client Outlook Inc. for an all-cash transaction of $40.8 million. The company financed the acquisition through an entitlement offer and existing cash reserves. In addition, the company is likely to pay an additional $2.7 million in Q2 FY21 to the vendors for working capital which has been contributed to the Mach7 Group because of the acquisition. M7T’s integration of Client Outlook is on track with $1.5 million of cost synergies already achieved. In addition, the company produced a total contract value of $3.3 million of new sales orders, and recurring revenue has increased by $0.9 million per annum. The company added 9 new customers and recorded cash flow from operations of $1.8 million.
FY20 Financial Highlights: During the year ended 30th June 2020, the company finished 29 new sales order contracts from a mix of new and existing customers, reflecting growth of 115%. In the same year, M7T reported revenue amounting to $18.9 million, indicating a rise of 102% over pcp. In addition, M7T recorded Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) and Net Profit After Tax (NPAT) of $3.3 million and $0.2 million, respectively, which were supported by robust growth in revenues as a result of customer take-up and installation progress.
Key Financials (Source: Company Reports)
Outlook: The company seems to be well-placed to continue delivering great outcomes for its customers, employees and investors. In addition, the company is optimistic about the delivery of strong double-digit revenue growth, EBITDA growth and positive free cash flows into the future.
Valuation Methodology: EV/Sales Multiple Based Relative Valuation (Illustrative)
EV/Sales Multiple Based Relative Valuation (Source: Refinitiv, Thomson Reuters)
Note: All the forecasted figures are taken from Thomson Reuters, NTM: Next Twelve Months
Stock Recommendation: The company closed the Q1 FY21 with a cash balance of $17.8 million. In the last one and three months, the stock has corrected 17.04% and 2.63%, respectively. On a technical analysis front, the stock of M7T has a support level of ~$0.871 and a resistance level of ~$1.131. We have valued the stock using an EV/Sales multiple based illustrative relative valuation method and arrived at a target price, which is offering an upside of lower double-digit (in percentage terms). For the purpose, we have taken peers such as Volpara Health Technologies Ltd (ASX: VHT), Nanosonics Ltd (ASX: NAN) and Visioneering Technologies Inc (ASX: VTI). Therefore, considering the recent acquisition of Client Outlook Inc., growth in financials, future focus and key risks, we give a “Speculative Buy” recommendation on the stock at the current market price of $0.925 per share, down by 1.596% on 28th October 2020.
Atomo Diagnostics Limited
Approval from TGA: Atomo Diagnostics Limited (ASX: AT1) is engaged in the supply of unique, integrated rapid diagnostic test (RDT) devices to the global diagnostic market. The market capitalisation of the company stood at ~$196.82 million as on 28th October 2020. Recently, the company notified the market that it has received approval from Therapeutic Goods Administration (TGA) for its rapid SARS-CoV-2 antigen blood test for use by medical professionals in Australia. In addition, the product has been included in its existing Australian Register of Therapeutic Goods (ARTG) listing.
Robust Growth in Top-line: The financial year 2020 proved as a transformational year for the company, which was aided by successful IPO and listing on the Australian Securities Exchange. In addition, this was also supported by entry into a number of material commercial customer agreements and accelerated growth in its revenues. The company reported revenue amounting to $5.4 million, which increased by 10x of FY19. This was underpinned by its core HIV and OEM businesses, and a significant boost from its rapid response to international demand from customers for COVID-19 point-of-care antibody test devices. Underlying EBITDA loss for the period amounted to $2.4 million, reflecting a significant improvement from FY19 loss of $4.1 million.
Sales Revenue (Source: Company Reports)
Outlook: For FY21, the company is intending to grow strategic commercialisation and distribution partnerships in key global markets with an objective of the expansion of clinical test applications commercialised on Atomo devices. Looking ahead, the company is also be focused on the development and commercialisation of new products and technologies.
Valuation Methodology: EV/Sales Multiple Based Relative Valuation (Illustrative)
EV/Sales Multiple Based Relative Valuation (Source: Refinitiv, Thomson Reuters)
Note: All the forecasted figures are taken from Thomson Reuters, NTM: Next Twelve Months
Stock Recommendation: Following its IPO in FY20, the company eliminated all its debts and entered FY21 with a cash balance of $27.1 million, robust demand for its unique innovative products and further growth opportunities in the pipeline. On a technical analysis front, the stock of AT1 has an immediate support level of ~$0.32 and a resistance level of ~$0.35. We have valued the stock using an EV/Sales multiple based illustrative relative valuation method and arrived at a target price, which is offering an upside of low double-digit (in percentage terms). For the purpose, we have taken peers such as Ansell Ltd (ASX: ANN), Nanosonics Ltd (ASX: NAN) and Mach7 Technologies Ltd (ASX: M7T). Thus, in light of recent approval from TGA, growth in topline and outlook, we give a “Speculative Buy” recommendation on the stock at the current market price of $0.325 per share, down by 7.143% on 28th October 2020.
BARD1 Life Sciences Limited
Successful Evaluation of BARD1 Kit: BARD1 Life Sciences Limited (ASX: BD1) is involved in the development and commercialisation of cancer diagnostic products. The market capitalisation of the company stood at ~$59.86 Mn as on 28th October 2020. Recently, the company notified the market about the successful assessment of the BARD1 kit in ovarian cancer samples on the Luminex platform. The company added that the results have revealed great discrimination between cancer patients and controls with fewer peptides. The next step for the development of BARD1-Ovarian cancer test is to perform a study via utilising the new RUO BARD1 kits in an independent sample set at an independent laboratory in Australia.
Financial Highlights: During FY20, BD1 recorded revenue amounting to $169,385, reflecting a rise of 187.5% on the previous year. Net loss for the year stood at $3,260,440 as compared to $1,730,572 in FY19. In the month of July 2020, BD1 finished the acquisition of Sienna Cancer Diagnostics, which supported the company in strengthening its leadership, business, pipeline and balance sheet. During the year, the company has been granted multiple new patents across 3 patent families in Australia, Europe, Hong Kong, Israel, Japan and Singapore.
Key Financials (Source: Company Reports)
Outlook: During FY20, the company managed to achieve significant progress on its R&D programs and cemented its patent portfolio. The acquisition of Sienna Cancer Diagnostics demonstrates the culmination of the company’s growth strategy and it may help the company in realizing value from innovative technologies, commercialisation of the diagnostics pipeline. The company is scheduled to conduct its 2020 Annual General Meeting on 26th November 2020.
Stock Recommendation: As on 30th June 2020, the cash balance of the company stood at $7.3 million. The stock of BD1 has corrected 19.35% and 3.84% in the last three and six months, respectively. As a result, the stock is inclined towards its 52-week low levels, offering decent opportunities for accumulation. On a technical analysis front, the stock of BD1 has a support level of ~$0.023 and a resistance level of ~$0.028. Hence, considering the successful evaluation of BARD1 Kit, growth in topline and key risks, we give a “Speculative Buy” recommendation on the stock at the current market price of $0.025 per share on 28th October 2020.
Comparative Price Chart (Source: Refinitiv, Thomson Reuters)
Disclaimer
The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkine.com.au and associated pages are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation. Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product. The link to our Terms & Conditions has been provided please go through them and also have a read of the Financial Services Guide. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine Pty Ltd do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as personalised advice.