1. Respiri Limited (Recommendation: Speculative Buy, Market Cap: ~$122.28 Million)
Manufacturing Commenced Despite COVID-19: Respiri Limited (ASX: RSH) is an eHealth SaaS Company supporting respiratory health management.
- During the quarter ending 30 September 2020, the company commenced manufacturing of the first batch of 2,000 wheezos deliverable under the agreement with Cipla Australia, with some deliveries completed in October and some planned for January 2021. The company also entered a binding Electronic Manufacturing Services (EMS) agreement for the global supply of wheezo. Expenses increased during the quarter due to a significant ramp-up in activity. After the quarter-end, the company raised $12.5 million in funding to support market and product development activities.
- Debt Scenario: As on 30 June 2020, the company had debt amounting to $0.89 million and a cash balance of $3.6 million.
- Overview of Financials/Fundamentals: In FY20, the company had a current ratio of 2.2x, as compared to the previous year ratio of 0.39x.
A Pictorial Presentation of Key Financials:
SWOT Analysis:
Stock Recommendation:
- The stock of the company has corrected by 29.78% in the last one month.
- On the technical analysis front, the stock has a support level of ~$0.135 and a resistance level of ~$0.251.
- Full-scale launch of wheezo is nearing completion and the company expects payments from Cipla orders in November 2020, which will be a key financial milestone.
- The company is exposed to foreign exchange risk and credit risk.
- Considering the progress in the launch of wheezo, partnership for global supply, decent liquidity to undertake product development and expansion, current trading levels, and key risks exposure, we give a “Speculative Buy” recommendation on the stock at the current price of $0.165, down 2.942% on 13 November 2020.
2. PainChek Limited (Recommendation: Speculative Buy, Market Cap: ~$99.15 Million)
Rapid Business Expansion in September Quarter: PainChek Limited (ASX: PCK) is the developer of the world’s first smartphone-based pain assessment and monitoring application.
- During the September 2020 quarter, the company recognised $750k in revenue. The company delivered significant growth in the aged care market and expanded into the home care, hospital and disability segments. It has three pilot programs underway in the $2 Billion Australian Home Care market and entered a new Disability commercial agreement with Nulsen Group. The quarter witnessed positive progress in the revised Children’s App clinical study, with TGA and CE Mark clearance expected in 2021. During the quarter, the company raised $10M via a private placement to develop new products and accelerate international growth opportunities.
- Debt Scenario: As on 30 June 2020, the company had zero debt and a cash balance of $6.12 million. Cash balance as on 30 September 2020 increased to $13.8 million as a result of the capital raising.
- Overview of Financials/Fundamentals: In FY20, the company had a current ratio of 2.97x and a gross margin of 10.8%.
A Pictorial Presentation of Key Financials:
SWOT Analysis:
Stock Recommendation:
- The stock of the company has corrected by 18.18% in the last three months and is currently inclined towards its 52-week low of $0.061.
- On the technical analysis front, the stock has a support level of ~$0.061 and a resistance level of ~$0.144.
- The company reported a significant increase in residential aged care facilities, approved beds, and normalized contracted Annualized Recurring Revenue in the September quarter. PCK is progressing well on market expansion and is engaged in continuous product development and research to build a strong foundation for the future.
- Key Risks: COVID-19 disruptions, foreign currency exchange and liquidity pose risks to the company.
- Considering the current trading levels performance in the September quarter, growth opportunities, plans in the pipeline for new products and existing product development, and key risks exposure, we give a “Speculative Buy” recommendation on the stock at the current price of $0.089, up 1.136% on 13 November 2020.
3. Osprey Medical Inc. (Recommendation: Speculative Buy, Market Cap: ~$35.71 Million)
Strong Month on Month Unit Sales Growth in Q3 2020: Osprey Medical Inc. (ASX: OSP) is a US-based, commercial-stage company focused on protecting patients from the harmful effects of X-ray dye (contrast) used during commonly performed angiographic imaging procedures.
- During the September 2020 quarter, the company reported sales growth of 68% on the previous quarter and a rebound in unit sales after the adverse impact of COVID-19. The company entered into distribution agreements GE Healthcare and Regional Health Care Group to expand its sales. The agreements provide strong validation for the company’s technology and give access to new and attractive markets globally. In 3Q 2020, the company sold 1,179 units, with sales amounting to US$379k.
- Debt Scenario: As on 30 June 2020, the company had debt amounting to $1.92 million and a cash balance of $14.16 million. As on 30th September 2020, the company’s cash balance stood at $9.8 million.
- Overview of Financials/Fundamentals: The company has reported an improving gross margin over the period covering FY17 – FY19. Current ratio for FY19 stood at 4.15x, as compared to the industry median of 2.73x.
A Pictorial Presentation of Key Financials:
SWOT Analysis:
Stock Recommendation:
- The stock of the company has corrected by 14.81% in the last one month.
- On the technical analysis front, the stock has a support level of ~$0.007 and a resistance level of ~$0.158.
- On a trailing twelve months (TTM) basis, the stock has an EV/Sales multiple of 6.1x, lower than the industry median (healthcare) of 7.5x.
- The company delivered a strong sales result in the September quarter, with remarkable results from its cost reduction program with operating cash outflows of US$2.9 million and net cash used in operations of US$2.7 million, representing a 65% reduction and a 48% reduction, respectively.
- Key Risks: COVID-19 disruptions, foreign currency exchange and liquidity pose risks to the company.
- Considering the performance in Q3 2020, distribution agreements to expand sales, cash position, and key risks exposure, we give a “Speculative Buy” recommendation on the stock at the current price of $0.022 on 13 November 2020.
Comparative Price Chart (Source: Refinitiv, Thomson Reuters)
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