1. Kyckr Limited (Recommendation: Speculative Buy, Market Cap: ~$25.78 Million)

Kyckr Limited (ASX: KYK) is engaged in the provision of data and technology solutions to accelerate customer acquisition and protect against money laundering, fraud, and tax evasion.

• Investment in Sales and Marketing to Boost Growth: During FY20, the company reported revenue of $2.4 million, up 12.2% on the previous year. Reported loss after tax declined by 19% and stood at $4.9 million. The company strengthened its London office by hiring staff with significant enterprise SaaS experience. Overall, the financial year witnessed client and revenue growth, with a robust performance in April 2020.
• Debt Scenario: As on 30 June 2020, the company had debt amounting to $0.06 million and a cash balance of $6.66 million. As of July 2020, the company’s cash balance increased to $9.2 million.
• Overview of Financials/Fundamentals: In FY20, the company had a gross margin of 56.8%. Current ratio for the year stood at 4.97x, as compared to the industry median of 1.96x.

A Pictorial Presentation of Key Financials:

SWOT Analysis:

Stock Recommendation:

• The stock of the company has corrected by 13.63% in the last three months and is currently inclined towards its 52-week low of $0.035.
• On the technical analysis front, the stock has a support level of ~$0.034 and a resistance level of ~$0.11.
• On a trailing twelve months (TTM) basis, the stock has a P/BV multiple of 1.7x, lower than the industry median of 2.3x.
• The company seems well-positioned for FY21, with the investments made in growth and marketing which will allow it to take full advantage of the sales opportunities ahead.
• Key Risks: Foreign Currency Risk and Competition Risk.
• Considering the performance in FY20, multiple agreements, strong balance sheet, current trading levels, and key risks exposure, we give a “Speculative Buy” recommendation on the stock at the current price of $0.076, up 1.333% on 23 October 2020.
  

2. MGM Wireless Limited (Recommendation: Speculative Buy, Market Cap: ~$22.30 Million)

MGM Wireless Limited (ASX: MWR) is a software company that designs and develops breakthrough technology and wearable devices that enrich connections between families, schools, and society.

• Substantial Growth in FY20 Revenue: During FY20, the company’s revenue increased by 47%. EBITDA loss for the year decreased by 2% and net loss improved by 9%. Cash and cash equivalents for the period increased by 93%. The company launched SPACETALK, with around 902 stores to sell the product across different locations. Device revenue for the year went up by 53% to $6.4 million and app revenue increased by 180% to $1.2 million. App annualised recurring revenue increased by 89% to $1.5 million.
• Debt Scenario: As on 30 June 2020, the company had debt amounting to $0.14 million and a cash balance of $3.17 million.
• Overview of Financials/Fundamentals: In FY20, the company had a gross margin of 70.9%. Current ratio for the year stood at 2.57x, as compared to the industry median of 1.17x.

A Pictorial Presentation of Key Financials:

 

SWOT Analysis:

Stock Recommendation:

• The stock of the company has moved up by 8.33% in the last three months and is currently inclined towards its 52-week low of $0.069.
• On the technical analysis front, the stock has a support level of ~$0.08 and a resistance level of ~$0.21.
• On a trailing twelve months (TTM) basis, the stock has an EV/Sales multiple of 1.8x, lower than the industry median of 2.4x.
• The company reported a remarkable financial performance in FY20, with growth across all business channels. New market entry and product launch are expected to be the key catalysts, going forward.
• Key Risks: Foreign Currency Risk and Liquidity Risk
• Considering the growth in revenue, product launch, distribution agreement, current trading levels, and key risks exposure, we give a “Speculative Buy” recommendation on the stock at the current price of $0.130, down 3.704% on 23^rd October 2020.

3. Knosys Limited (Recommendation: Speculative Buy, Market Cap: ~$17.86 Million)

Knosys Limited (ASX: KNO) is primarily engaged in computer software sales, licencing and development.

• FY20 License and Support Fee Revenue Up by 19%: During FY20, the company’s revenue came in at $3.14 million, up 8% on the previous year. Loss for the period improved by 18%. The company reported strong year-on-year growth in recurring revenue. License and support fee revenue for the year came in at $2.94 million, up 19% on the previous year. By the end of the year, the number of licensed users of Knosys product increased to 41,360. Going forward, the company seems well-placed to build on its recurring revenue base and achieve further sales growth in FY21.
• Debt Scenario: As on 30 June 2020, the company had debt amounting to $0.34 million and a cash balance of $3.34 million.
• Overview of Financials/Fundamentals: In FY20, the company had a current ratio of 2.09x, as compared to the industry median of 1.96x. Over the last 4 years, the company has witnessed a substantial improvement in ROE.

A Pictorial Presentation of Key Financials:

 

SWOT Analysis: 

Stock Recommendation:

• The stock of the company has gone up by 30% in the last one month.
• On the technical analysis front, the stock has a support level of ~$0.064 and a resistance level of ~$0.2.
• On a trailing twelve months (TTM) basis, the stock has an EV/Sales multiple of 5.3x, lower than the industry median of 6.9x.
• Notably, the company’s annual recurring revenue has grown continuously since FY16 and is expected to grow further considering the contracts signed, potential clients in pipeline and the benefits offered by its products and services.
• Key Risks: COVID-19 Impact and Liquidity Risk.
• Considering the strong recurring revenue profile, major contract with ANZ Bank, potential clients, and key risks exposure, we give a “Speculative Buy” recommendation on the stock at the current price of $0.130, up 8.333% on 23 October 2020.

Comparative Price Chart (Source: Refinitiv, Thomson Reuters)

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