This report is the updated version of the report uploaded on 24 June 2022 at 3:12 PM GMT
Section 1: Company Overview and Fundamental Insights
1.1 Company Overview:
MSL Solutions Limited (ASX: MSL) provides software-as-a-service (SaaS) solutions to the leisure, sports, and hospitality sectors and operates segments, namely the UK, Asia Pacific, and Denmark. The company is engaged in developing and offering fully integrated and modular systems that bridge the gap between customers and venues via mobile and contactless entry.
1.2 The Key Positives, Negatives, Investment Highlights and Risks
1.3 Top 10 Shareholders:
The top 10 shareholders together form around 42.32% of the total shareholdings. Microequities Asset Management Pty Ltd. held the maximum number of shares with a percentage holding of 12.28%, followed by Forager Funds Management Pty Ltd holding 5.20%, as also highlighted in the chart below:
1.4 Key Metrics:
The cash cycle days for 1HFY22 stood at negative 82.8 days, compared to the industry median of positive 12.4 days, depicting decent financial condition to pay down outstanding debt.
Section 2: Financial Highlights
2.1 Key Results for 1HFY22 (Six-Months Ending 31 December 2021):
The company completed the acquisition of OrderMate on 30th September 2021, a hospitality POS systems business. The move is expected to position MSL as one of the key POS systems providers in Australia, expanding its digital ordering solutions.
2.2 Historical Trend:
MSL illustrated sustainable historical growth, due to favourable contributions from the UK, Denmark, and Australia. EBITDA has been growing since 1HFY19.
Section 3: Key Risks and Outlook
Section 4: Stock Recommendation Summary
4.1 Price Performance and Technical Summary
- On the daily chart, MSL stock prices are taking the support of the horizontal trendline and sustaining the above trendline support zone.
- Moreover, the momentum oscillator RSI (14-period) shows a reading of ~35.86 level. However, the prices are trading below the trend-following indicator 21-period SMA, which may act as a resistance level.
4.2 Stock Summary
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.
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.
Technical Indicators Defined:-
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.
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