Company Overview: Yojee Limited (Yojee), formerly Southern Crown Resources Limited, is engaged in developing a sharing economy-based logistics technology through the creation of the Yojee delivery network and blockchain technology platform. The Company is engaged in the development of a logistics technology platform to enable mass participation in a sharing economy network to help both carrier and sender. The Company's collaborative economy technology platform focuses to provide on-demand movement of goods and services. The Company's platform aggregates and optimizes logistics businesses. Yojee implements real-time tracking and a blockchain technology payment system. Yojee will connect and enable logistics providers with limited geographical capability. Yojee will also help e-commerce companies. The Company focuses on developing a logistics software to serve small and medium businesses. The Company focuses on the Asia-Pacific region.


YOJ Details

Unique Business Model: Yojee Limited (ASX: YOJ) is a technology company, that utilizes artificial intelligence (AI) and blockchain technology to create a seamless regional freight network. The group generates revenue from the multiple sources such as traditional parcel delivery, white label of UBERFYING software and white label of fleet management software. Under this, it provides advanced logistics software that can connect any-size logistics company to create private, route-optimized supply chains to compete with companies like United Parcel Service or Amazon, FedEx Corporation, or to enable participation in YOJ’s collaborative cross-border logistics network. As of now, the group is actively working on incorporating Blockchain technology on the top of its Artificial Intelligence backed software solution to increase the efficiency thus enabling to generate more revenue. The company focuses on to expand its network delivery services to eight nations i.e., Singapore, Indonesia, Malaysia, Thailand, Philippines, Vietnam, New Zealand and Australia. We expect that the company will continue to improve the volume growth of its services on account of increasing demand for e-commerce business and expanding geographic wings. 


Super Collaborative Network (Source: Company Reports)

Signed 2-Year Contract with Riverwood Logistic – Support Topline Growth: The Group witnessed a stock price rise after the company signed a 2-year strategic agreement with Singapore-based Riverwood Pte Ltd to provide its logistics software. As per the agreement, Riverwood will use the software ‘off the shelf’ and offer its freight services as a partner to the Yojee freight network. This contract is unconditional and is effective from July 18, 2018. In addition to this, any custom innovation beyond the deal which has already been granted between the parties will be considered as paid service. The objective of this deal is to scale up the business and increase efficiencies; reduce costs per delivery; and delight drivers and customers. Further, YOJ will receive $0.20 for each transaction completed by Riverwood through the software. YOJ sees this deal as an important contract because of the calibre of Riverwood, and its presence in the Singaporean market. Additionally, Riverwood has been growing by 10% on Q-o-Q basis and expects to expand into a new 35,000 square foot warehouse and buying more vehicles to handle growing demand.

Quarterly Cash Flow Update (31 March 2018): The Company released its Quarterly Cashflow report for the quarter ended 31 March 2018 wherein cash outflow from operation recorded $1.6 million which was up by around 33.4% as compared to the previous quarter. The increase in cash outflows was mainly due to research and development expenses, product manufacturing and operating cost, advertising and marketing expenses, leased assets, administration and corporate costs incurred during the quarter. The Company had $ 3.727 million in cash at the end of the March 2018 quarter. Total cash receipts during the same period were $100k. Further, the group estimated cash outflow for the next quarter which will be incurred approximately $1,710k, comprising of R&D expenses ($452k), product manufacturing and operating cost ($354k), advertising and marketing cost ($68k), leased assets ($77k), employee cost ($489k), administrative and corporate costs ($270k).


Next Quarter Cash Outflow Estimates (Source: Company Reports)

Synergistic Agreements for overall growth: Tie-ups with UPS Asia Group Pte Ltd, Schenker (Asia Pacific) Pte Ltd, and Sinotrans Integrated Logistics Australia can help to increase the topline growth of the company in the forthcoming period at the back of identifying further opportunity in Asia market and Australia via collaborations and increasing technology network in the logistics sector.
 

a) Collaborative Deal with UPS to Support Topline Growth: The group has entered into a 12-month Innovation Framework Deal with UPS Asia Group Pte Ltd (UPS) to provide a framework to facilitate an ongoing technology collaboration. The objective of this overarching agreement is to enable both parties to more efficiently work together to develop, or improve, services and products for the UPS operating environment, and identify further opportunities to collaborate in areas spanning technology, software, payments and blockchain. Hence, we expect that this agreement will facilitate a broader and longer-term collaboration resulting in topline growth over the coming months.

b) Strategic Agreement with Schenker (Asia Pacific) Pte Ltd: The group inked a strategic Services Agreement with Schenker (Asia Pacific) Pte Ltd. The purpose of this deal is to begin developing an On-Demand Last Mile Delivery Service Platform in Asia market. According to the deal, Schenker will pay fee to commence a project for the implementation of Yojee’s platform at its e-commerce and last mile operations. These operations include warehousing, cross-docking, wharf cartage, route optimisation and operational efficiency modelling, blockchain application, coordination of customer projects, and customer-facing experiences. Initially, this project will run for up to 4 months, after that both parties will evaluate the next steps. We expect that this deal will support to expand its network technology resulting in the future potential of the company.

c) Partnership with Sinotrans Integrated Logistics Australia: Recently, the group entered into the partnership with Sinotrans Integrated Logistics Australia (SILA) with the objective of expanding customer base and sales. As per the agreement, the contract between the parties will be initially for two-years in order to maximise delivery visibility, optimise their dispatching capabilities and manage their third-party partners with the use of YOJ’s Control Tower. Moreover, SILA has now completed its testing phase and is beginning its preparation for a full scale roll out across it's delivery network. The group expects that there is potential over the coming months or a number of new opportunities to arise through the network effect of the technology and also a large number of companies looking for a similar product. As per YOJ’s market research, there are hundreds of companies in Australia alone that could utilize this specific product.

Successfully Completed Share Placement Event –  Support to Ongoing Development Program: Recently, the group has successfully raised $8.0 Million capital via share placement from its existing major shareholders and new institutional investors. In turn, the company will issue 80 Mn fully paid ordinary shares at an issue price of $0.10 per share, pursuant to its existing 15% capacity under Listing Rule 7.1. We expect that the company will use this fund to build out Asia-Pacific marketplaces, advance leadership in smart logistics optimization technologies, expand geographical sales presence and fast-track customer adoption. 

Financial Highlights: The company for the half year ended December 2017 has reported remarkable growth of 904% in the topline as compared to the prior corresponding period and 357% rise in the Net Loss from ordinary activities attributed to members. Based on the strong performance in the first half, the current ratio substantially improved from 4.94x to 20.16x in 1HFY18 as compared to prior corresponding period. Further, the company is enjoying zero debt status which will support to execute growth plans without affecting the financial performance of the company. Additionally, account receivable days substantially decreased from 1558.5 days to 60.3 days in the past six months which is likely to be in-line with the industry median (62.4 days). As under its growth phase, the company has no proposal to pay dividend.


1HFY18 - Consolidated P&L (Source: Company Reports) 

Positive Outlook: The company has a positive outlook at the back of the robust business model wherein the group generates monthly recurring revenues from SaaS-based software subscriptions to logistics companies, focus on e-commerce opportunity, increasing high-quality & global customer base across the logistic sector. During the quarter, the company had completed the integration of blockchain into its software products and ran a successful pilot with delivery giant UPS in Asia and is now progressing through next steps. The freight and logistics sectors are investing heavily in blockchain technology to deliver a cheaper, more efficient, transparent and secure system to manage the enormous growth expected in global logistics over the next decade. Therefore, we expect that there is a headroom to grow further at the back of massive opportunity in the logistic sector.


Huge Market Opportunity (Source: Company Reports)

Other Key Updates: The group has appointed Mr. Carl Hemus to the Board as a Chief Operating Officer (COO), effective from September 01, 2018. He has rich exposure, spanning over 25 years, working within the logistics, global supply chain and eCommerce sectors in Europe and more recently, Asia, and is the ideal appointment for the group as it enters a significant growth phase in the Asian region and beyond. To attract talent like Carl reflects the standing YOJ now has in the industry as a leader in the digitization of global supply chains.

Stock Performance: In the recent time, the company had shown some solid growth even with the transition from version 1.0 to version 2.0 product. Along with this, the group has created a robust sales team in new cities to get new leads from the market. As a result, new customers were signed up and implemented in multiple countries, with a significant rise in interest from the various companies outside of South East Asia. Armed with the new product and its intelligence capabilities, the sales team will now be able to capitalize the enormous inbound interest in Yojee’s technology platform. Given this backdrop, we expect that the company growth momentum will continue over the coming period because of rising demand for e-commerce business around the world. Meanwhile, the stock has fallen 60.38 per cent in the last six months and further down by 12.50 per cent in the past one week (as at July 19, 2018). It is worth noting that the stock was up by 181.25 per cent in the last five years. Based on aforesaid facts and current trading scenario, we give a “Speculative Buy” recommendation on the stock at the current market price of $ 0.110 (up over 4.7% on July 20, 2018) as the group eyes to have better market share and is working towards to generate its own parcel, pallet, and container revenue and support the network participants by setting the new delivery revenue into the network.

 

YOJ Daily Chart (Source: Thomson Reuters)

 
Disclaimer
 
The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkine.com.au and associated pages are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation. Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product. The link to our Terms & Conditions has been provided please go through them and also have a read of the Financial Services Guide. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine Pty Ltd do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations.