Flexiroam Limited (Recommendation: Speculative Buy, Market Cap: ~$28.26 million)

Flexiroam Limited (ASX: FRX) provides connectivity across any device, in any part of the world for any application. The versatile network currently covers 520 network operators in over 200 countries and territories.

Recent Updates:

• As announced on 4 March 2022, the company’s founder and Chief Innovation Officer Jef Ong would be transitioning into the role of Non-Executive Director (NED) with effect from 1 April 2022.
• The company has inked a first maritime communications enterprise data agreement for providing connectivity to NearshoreNetworks Inc.

Insights into Q3FY22: During the quarter ended 31 December 2021, the company recorded a substantial rise of 116% in revenue to $1.1 million over pcp. FRX signed a white label agreement to data resellers Wave Rewards, BP Mobile and Global Wireless Telecom, which may generate a total annualised revenue of $1.7 million. In addition, the Mastercard partnership was extended for a third year for $340k and Korean Air for A$60k of annualised revenue.

Liquidity Position: During the quarter, the company experienced a rise of 42% in cash receipts to $963k over pcp. In addition, the company closed the quarter with a cash balance of $2.25 million, which include a capital raising of $1.5 million in October 2021. In the month of February 2022, the company wrapped up placement and raised $2.75 million, which would be utilised for enhancing its growth initiatives and capitalising on the expansion into the global Internet of Things (IoT) connectivity market.

Current Ratio Trend (Source: Analysis by Kalkine Group)

Outlook: Looking forward, the company continue to expand its pipeline of bespoke IoT solutions, and recent capital raising has placed the company in a decent position to close out highly scalable IoT connectivity deals in global markets. In addition, the company seems to be well-financed to progress numerous strategic growth initiatives throughout key IoT verticals, which include the development of core IoT features and additional partnerships to penetrate global markets.

SWOT Analysis:

Stock Recommendation:

• During the past one month, the stock has corrected by ~8.91% and is trading above to its average of 52-week low-high band of $0.023-$0.059.
• FRX has an EV/Sales multiple of 10.6x against the industry average (Telecommunications Services) of 17.1x on a TTM basis. Thus, it seems that the stock is undervalued at the current trading levels.
• Key Risks: COVID-19 led uncertainties, Stiff Competition, Technology Risk, etc.
• Considering the growth in revenue, signing of agreements, 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 current market price of $0.046 as on 11 March 2022, 12:30 PM (GMT+10), Sydney, Eastern Australia.

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.

FRX Daily Technical Chart, Data Source: REFINITIV 

Petratherm Limited (Recommendation: Speculative Buy, Market Cap: ~$7.95 million)

Petratherm Limited (ASX: PTR) is engaged in the exploration activities at its existing portfolio of mineral exploration projects. The company continue to seek out extensions of areas held and to seek out new projects with high potential.

Q2FY22 Operational and Financial Highlights: During the quarter ended 31 December 2021, the company finished a major phase of infill and regional RAB drilling at the Comet Gold Project to explore new gold anomalous areas. PTR recorded exploration and evaluation costs of $169,000, mainly related to the Comet Project drilling operations during the quarter. The company had a cash balance of $2.69 million at the end of the quarter.

Cash and Debt Position: The company has a cash balance of $2.69 million at the end of the quarter. In addition, the company had nil debt at the end of FY21. In FY21, the company recorded a current ratio of 32.47x as compared to 20.89x in FY20.

Current Ratio Trend (Source: Analysis by Kalkine Group)

Outlook: The company would be focused on drilling pipelines of gold and copper targets in the upcoming period. In addition, the company has scheduled drilling of Gina IOCG Project target in FY22. With respect to Woomera IOCG Project, the company has planned a drilling campaign of multiple IOCG style geophysical targets in Q2 2022.

SWOT Analysis:

Stock Recommendation:

• During the past six months, the stock has corrected by ~21.31% and is trading near to its average of the 52-week’s low-high price band of $0.031-$0.170, offering a decent opportunity for accumulation.
• The stock of PTR is trading at a P/BV multiple of 1.7x as compared to the industry median (Metals & Mining) of 2.3x on a TTM basis. Thus, it seems that the stock is undervalued at the current trading levels.
• Key Risks: COVID-19 led uncertainties, Gold Price Risk, Change in Climate, etc.
• Considering the progress in exploration activities, decent liquidity position, nil debt in FY21, 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 $0.048, up by ~20% as on 11 March 2022.

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.

PTR Daily Technical Chart, Data Source: REFINITIV

SenSen Networks Limited (Recommendation: Speculative Buy, Market Cap: ~$74.78 million)

SenSen Networks Limited (ASX: SNS) is engaged in the development and sale of SenDISA platform-based products and services into the three major market segments, which are Smart Cities, Casinos and Retail. SenSen has clients on four continents and operates in Australia, New Zealand, Singapore, USA, Canada, India and UAE.

Insights of 1HFY22: During the half-year ended 31 December 2021, the company recorded growth of 19% in revenue to $3.0 million. In addition, monthly recurring revenue stood at a record of $0.45 million. During the period, the company finished the acquisition of Scancam Industries for $6.5 million, provider of AI anti fuel-theft solutions.

Cash and Debt Position: The company closed 1HFY22 with a net cash position of $8.2 million as compared to $5.2 million as of 30 June 2021. At the end of 1HFY22, the company had cash & cash equivalents of ~$8.22 million against ~$5.17 million as on 30 June 2021.

Current Ratio Trend (Source: Analysis by Kalkine Group)

Outlook: The company’s solutions are gaining strong sales momentum in key market segments – Smart Cities, Casinos and Smart Retail. This was evident by eight new contracts with a value of $4.782 million. SNS believes that the sales pipeline is continuing to build and is likely to lead to further customer contracts in the near future. In addition, the company is on track to achieve revenue of ~$11 million and grow MRR to ~$0.65 million by the end of FY22.

SWOT Analysis:

Stock Recommendation:

• During the past six months, the stock has corrected by ~11.53% and is trading near to its 52-week low level of $0.105, offering a decent opportunity for accumulation.
• On a TTM basis, SNS has an EV/Sales multiple of 11.2x against the industry average (Software & IT Services) of 47.3x. Thus, it seems that the stock is undervalued at the current trading levels.
• Key Risks: COVID-19 led uncertainties, Shift in Technology, Competitive Pressure, etc.
• Considering the growing revenue, decent liquidity position, winning of 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 $0.115 as on 11 March 2022.

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.

SNS Daily Technical Chart, Data Source: REFINITIV

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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