1. SenSen Networks Limited (Recommendation: Speculative Buy, Market Cap: $62.43 Million)

SenSen Networks Limited (ASX: SNS) is involved in the development and sale of SenDISA platform-based products and services. The company operates into the three major market segments: Smart Cities, Casinos, and Retail. It operates in Australia, New Zealand, Singapore, the USA, Canada, India, and UAE.

Financial and Operational Highlights: As announced on 11 May 2022, the company has appointed Dr Roberto Mariani as Chief Technology Officer to strengthen its management team. In addition, the company’s wins of the new contracts in the past months showcased the strength of its ‘land and expand’ strategy with existing customers and partners. During the quarter ended March 2022, the company experienced record cash receipts of $1.7 million, reflecting a rise of 109% over Q3FY21. SNS closed the quarter with cash and cash equivalents of $5.7 million and unused finance facilities of $1.8 million.

Insights of 1HFY22: Revenue for the half-year rose by 19% to $3.0 million. In addition, monthly recurring revenue amounted to $0.45 million, which was a record level for the business.

Current Ratio Trend (Source: Analysis by Kalkine Group)

Contract Secured from Brisbane City Council: The company has received a new order for four additional vehicle-mounted AI solutions from Brisbane City Council. The contract would commence in June 2022, and SNS would earn an initial upfront payment of A$278,000, as well as ongoing annual licensing and service & processing fees of a minimum of A$280,000 per annum on the four additional systems.

Change in Substantial Shareholding: Mizikovsky Group becomes a substantial shareholder of SNS with the acquisition of ~35.31 million shares, representing voting rights of 5.43%.

Outlook: For FY22, the company expects to report revenue in the range of $9.0 million - $9.5 million, indicating revenue growth of 60%-70% over FY21’s revenue of $5.5 million. SNS believes that the Monthly Recurring Revenue (MRR) continues to grow strongly, and the guidance for the same has been upgraded to $0.65 million - $0.7 million for FY22. In addition, SenSen’s order pipeline is robust, and no expected orders or contracts have been lost.

SWOT Analysis:

Stock Recommendation:

• During the past six months, the stock has corrected by ~25.83% and is trading closer to its 52-week low level of $0.086, offering a decent opportunity for accumulation.
• On a TTM basis, SNS has an EV/Sales multiple of 6.2x against the industry average (Software & IT Services) of 57.2x. Thus, it seems that the stock is undervalued at the current trading levels.
• Key Risks: COVID-19 led uncertainties, Stiff Competition, Change in Climate, etc.
• Considering the rising cash receipts, growing topline, new contracts, optimistic outlook, current trading level, valuation on a TTM basis, and key risks associated with the business, we give a “Speculative Buy” rating on the stock at the closing price of $0.089, down by ~7.291% as on 13 May 2022.

SNS Daily Technical Chart, Data Source: REFINITIV

2. Kingston Resources Limited (Recommendation: Speculative Buy, Market Cap: $55.72 Million)

Kingston Resources Limited (ASX: KSN) is a gold development and mineral exploration company. The company carries out its operations through Misima Gold Project in Papua New Guinea (PNG).      

Business Updates: The below picture provides an overview of key business updates:

Business Updates (Source: Analysis by Kalkine Group)

Insights of Q3FY22: During the quarter ended March 2022, the company finished the acquisition of Mineral Hill Mine (Cobar, NSW).  The company produced 1,757koz of gold and 3,378koz of silver during the quarter. The tonnes processed for the quarter stood at 159,205kt, with throughput at or above nameplate in March 2022. The company replaced the Mineral Hill environmental bond ($3.5 million) and paid the cash consideration of $1.4 million for Mineral Hill. It closed the quarter with a cash balance of $10.8 million.

Current Ratio (Source: Analysis by Kalkine Group)

Outlook: Looking forward, the company’s geology team are continuing diamond and Reverse Circulation resource development drilling programs at Pearse North. The company has scheduled to provide mineral resource updates at Pearse South and Pearse North in Q3 2022. In addition, historical data compilation and review would continue to assess the targets for programs of work in FY23 and beyond.

SWOT Analysis:

Stock Recommendation:

• During the past three months, the stock has corrected by ~22.86% and is trading near its 52-week low level of $0.120, offering a decent opportunity for accumulation.
• On a TTM basis, KSN is trading at a P/BV multiple of 1.0x against the industry median (Metals & Mining) of 2.0x. Thus, it seems that the stock is undervalued at the current trading levels.
• Key Risks: COVID-19 led uncertainties, Commodity Price Risk, Stiff Competition, Change in Climate, etc.
• Considering the new gold exploration targets, recent acquisition, nil debt to equity ratio, optimistic outlook, current trading level, valuation on a TTM basis, and key risks associated with the business, we give a “Speculative Buy” rating on the stock at the closing price of $0.130, down by ~3.703% as on 13 May 2022.

KSN Daily Technical Chart, Data Source: REFINITIV

3. Dimerix Limited (Recommendation: Speculative Buy, Market Cap: $48.13 Million)

Business Updates: Dimerix (ASX: DXB) is a clinical-stage biopharmaceutical company, which is engaged in the development of innovative new therapies in areas with unmet medical needs for global markets. The following picture provides an overview of valuable business updates:

Business Updates (Source: Analysis by Kalkine Group)

Q3FY22 Highlights: During the quarter ended March 2022, the company made significant progress across the Phase 3 FSGS global clinical study, towards opening all 75 sites in 12 different. DXB has been awarded a grant of $1 million from the Australian Government’s BTB program. The company recorded net operating cash flow of $0.5 million and closed the quarter with a cash position of $16.8 million.

Current Ratio (Source: Analysis by Kalkine Group)

Outlook: The company’s growth strategy revolves around advancing clinical trials to provide treatments globally for patients with serious and life-threatening inflammatory diseases. In addition, DXB seems to be well-positioned to deliver on its commitment to bringing the potential benefits of DMX-200 to these patients globally while building value for its stakeholders.

SWOT Analysis:

Stock Recommendation:

• During the past month, the stock has corrected by ~12.12% and is trading near its 52-week low level of $0.120, offering a decent opportunity for accumulation.
• On a TTM basis, DXB is trading at a P/BV multiple of 2.6x against the industry median (Biotechnology & Medical Research) of 3.1x. Thus, it seems that the stock is undervalued at the current trading levels.
• Key Risks: COVID-19 led uncertainties, Failure of Clinical Trials, Competition from Peers, Regulatory Risk, etc.
• Considering the R&D tax rebate, FDA IND approval, decent liquidity position, optimistic outlook, current trading level, valuation on a TTM basis, and key risks associated with the business, we give a “Speculative Buy” rating on the stock at the closing price of $0.145, down by ~3.333% as on 13 May 2022.

DXB Daily Technical Chart, Data Source: REFINITIV

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

Note 1: The reference data in this report has been partly sourced from REFINITIV.  

Note 2: Investment decision should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and subject to the factors discussed above.

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