The Offering

Company Overview

Halo Technologies Holdings Ltd (hereinafter referred to as “Halo” or “The Company”) is a fintech company that offers global equity research and investment technology products. The investment software solution offering of the company can be divided into two integrated elements- HALO Global and HALO Trading. HALO Global provides investors with a multi-functional research and investment software solution for researching global investment ideas and managing portfolios. HALO Trading provides global trade execution for individual companies and exchange-traded fund investment and transaction feeds from non-HALO platforms.

Source: IPO Prospectus 

Key Highlights

• Use of funds:

Source: IPO Prospectus

• Competitive edge over its peers: The company has uniquely positioned itself against its competition in the Australian market. The Halo mobile app provides access to cost-competitive pricing, company analysis, institutional-grade insights and portfolio management tools. This offering represents a much richer feature set than most competitors, who offer only basic company and market statistics along with the trade execution.
  

• Source of revenue: For FY21, the company generated its revenue from three segments: subscription revenue (42.8%), brokerage revenue (55.5%) and Macrovue Vues and other income (1.7%).

• Scalable market: The global wealth management market is valued at USD 1,263 billion in 2021 and is expected to grow with a compound annual growth rate (CAGR) of 9% till 2025 to become USD 1,755 billion in 2025. This provides ample opportunities for the company to capitalize on the industry tailwinds.
  

• Solid topline performance: The company has reported robust topline performance with pro forma revenue jumping from AU$ 1,418,000 in FY19 to AU$ 10,540,000 in FY21, implying a CAGR of 173%.
  

• Dividend Policy: Future dividend payment will depend on the company's operating results and financial condition, availability of distributable earnings, future capital requirements and general business, and other factors considered relevant by the Directors.
  

Financial Highlights

Source: IPO Prospectus

• The company has demonstrated a strong track record in revenue growth, with revenue jumping from AU$ 1,418,000 in FY19 to AU$ 10,540,000 in FY21. Further, the management expects continual growth in its revenue and market share both organically and via acquisitions.
• Reported solid growth in gross profit in absolute terms from FY19 to FY21; however, margin shrank from 49% in FY19 to 39.5% in FY21, led by the increase in the cost of services provided.
• Even though the total overheads have increased in absolute terms from FY 20 to FY21, as of % of sales, it has come down to ~33% in FY21 compared to ~50% in FY20. In FY19, total overheads surpassed the revenue collected from operations. 
• Reported positive EBITDA margin of 18% in FY21 compared to negative margin reported in FY19 and FY20.
• In FY21, the company turned profitable with NPAT of AU$ 1,009,000 compared to losses of
  AU$ 255,000 in FY20 and AU$ 1,241,000 in FY19.

Key Management Highlights

Source: IPO Prospectus

Associated Risk (High)

Investment in the IPO of "HAL" is exposed to a variety of risks such as:

• Intense competition: The global wealth management sector is highly competitive as several options are available to investors and other market participants. Also, fierce competition could lead to an increased price war within the rivals.  
• Regulatory risk: The brokerage and wealth management business is highly regulated, and changes in existing laws and regulations could negatively impact HALO.
• Growth stage company: Given that the company is in the early growth stage, there are significant uncertainties associated with forecasting the future revenues and expenses of the company.

Conclusion

The company has reported significant revenue growth in FY21 and has also uniquely positioned itself against its competitors by providing a feature-rich, global investment software solution by leveraging advanced technology.

However, given that the company is in its early growth stage, there may be uncertainties associated with forecasting the future revenues and expenses of the company. Also, there is intense competition within the sector where the company is operating.

Therefore, based on the above rationales, we have assigned the IPO of Halo Technologies Holdings Ltd with a “Neutral” rating, given the associated risks and the current market scenario, and further evaluation may be required for investors with a high-risk appetite.

*Please note that an IPO can be postponed or put on Hold at the discretion of the company or regulatory authority.

Disclaimer - This report has been issued by Kalkine Pty Limited (ABN 34 154 808 312) (Australian financial services licence number 425376) (“Kalkine”) and prepared by Kalkine and its related bodies corporate authorised to provide general financial product advice. Kalkine.com.au and associated pages are published by Kalkine.

Any advice provided in this report is general advice only and does not take into account your objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your objectives, financial situation and needs before acting upon it.

There may be a Product Disclosure Statement, Information Statement or other offer document for the securities or other financial products referred to in Kalkine reports. You should obtain a copy of the relevant Product Disclosure Statement, Information Statement or offer document and consider the statement or document before making any decision about whether to acquire the security or product.

You should also seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice in this report or on the Kalkine website. Not all investments are appropriate for all people.

The information in this report and on the Kalkine website has been prepared from a wide variety of sources, which Kalkine, to the best of its knowledge and belief, considers accurate. Kalkine has made every effort to ensure the reliability of information contained in its reports, newsletters and websites. All information represents our views at the date of publication and may change without notice.

Kalkine does not guarantee the performance of, or returns on, any investment. To the extent permitted by law, Kalkine excludes all liability for any loss or damage arising from the use of this report, the Kalkine website and any information published on the Kalkine website (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine hereby limits its liability, to the extent permitted by law, to the resupply of services.

Please also read our Terms & Conditions and Financial Services Guide for further information.

On the date of publishing this report (referred to on the Kalkine website), employees and/or associates of Kalkine and its related entities do not hold interests in any of the securities or other financial products covered on the Kalkine website unless those persons comply with certain safeguards, procedures, and disclosures.

NOTE - Halo Technologies Holdings Ltd. (Company) is a client of Kalkine Media Pty Ltd (Kalkine Media), an affiliate of Kalkine. However, under no circumstances have Kalkine or its related entities been, directly or indirectly influenced in making any direct or implied rating/recommendation or related insights concerning Company as contained in this report, and no form of compensation is or will be received by Kalkine, Kalkine Media or Kalkine’s other related entities for the publication of this report.