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

Significant Operational, Financial and Strategic milestones: Yojee Limited (ASX: YOJ) is a company which is focused on the development of sharing-economy based logistics technology via the creation of Yojee delivery network and secure blockchain technology platform. As on June 7, 2019, the market capitalisation of Yojee Limited amounted to ~A$84.74 million. It had earlier released its report for the six months to December 2018. In the month of July 2018, YOJ had wrapped up a share placement amounting to $8,000,000 to the sophisticated and institutional investors. As a result of this, the company issued 80 million fully paid ordinary shares involving an issue price amounting to $0.10 per share. The placement included the issue of 26,666,667 free attaching one-for-three unlisted options which are exercisable at $0.15 expiring 18 months from the date of issue. The company stated that the proceeds from the capital raising exercise would be utilised towards the company’s operations, which include building the stronger foothold in the Asia-Pacific market and enhancing the proprietary logistics software. Also, the company had made an announcement on July 18, 2018 that it had inked 2-year agreement, via its wholly owned subsidiary, Yojee Solutions Pte Ltd, with Riverwood Pte Ltd in order to provide YOJ’s logistics software to Riverwood. The parties had anticipated that it would enable Riverwood to build greater efficiencies and simplify and improve the user experience across the operation of Riverwood operations.

During the quarter ended March 2018, Yojee had created an Advisory Board and there were initial appointments of Peter J F McLean and Christopher Logan. During the same period, the company’s net cash used in operating activities stood at A$1.35 million and the company had made payments amounting to A$0.649 million towards product manufacturing and operating costs while A$0.502 million were incurred towards administration and corporate costs. As at 31 March 2019, the company had a cash & cash equivalent of $4.656 Mn. Moving forward, decent liquidity position, expansion of SendYojee network to Malaysia, lesser reliance on debt when it comes to financing the assets, and the development of sector agnostic product are expected to support the long-term growth prospects.


Net Cash Used in Operating Activities (Source: Company Reports)

Top 10 Shareholders: The following table provides a broad overview of the top 10 shareholders in Yojee Limited:

Top 10 Shareholders (Source: Company Reports)

Improvement in Key Margins Strengthens Confidence in Future Performance: Yojee Limited had witnessed a significant improvement in 1H FY 2019 in its key margins on the YoY basis which further increases the confidence in the company’s operational and business activities. The company possesses decent liquidity position as is evident from its 1H FY 2019 current ratio of 12.47x as compared to the industry median of 1.58x, which reflects that the company might be able to address its short-term obligations effectively than the broader industry. Also, the company can make investments towards its strategic business activities which might help it in achieving long-term growth objectives.

The company’s Assets/Equity ratio stood at 1.05x, which is lower than the industry median of 1.66x and, thus, it looks like that largely funding of the assets are being done with the help of equity and not debt. The lower reliance on debt is generally better as the company does not have certain obligations to be met.     


Key Metrics (Source: Thomson Reuters)

Improvement in Trade Revenue YoY: Yojee Limited had generated the trade revenues amounting to A$368,026 in the half-year ended December 2018, which implies a rise from A$204,819 generated in the half year to December 2017, largely because of a rise in software and network revenue. Also, there has been a rise in the company’s other income from A$18,088 in half year ended December 2017 to A$561,391 in the six months to December 2018 mainly due to a rise in foreign currency gain, interest income, and government grants.


1H FY 2019 Income Statement (Source: Company Reports)

Appointment To Advisory Board Team: Yojee Limited had made an announcement about the appointment of David Morton to the recently announced Advisory Board team. This happens to be a final appointment to the existing Advisory Board, rounding out strategic as well as operational growth focus of the Company for 2019. David Morton is a corporate banker who is having a successful career which spans 40 years at Westpac and HSBC. He recently returned to Australia after 12 years working in Asia (Vietnam, Malaysia, Hong Kong) in numerous pan Asian roles which includes Managing Director, Head of Corporate, Financials and Multinationals Banking, Asia-Pacific. The Managing Director Ed Clarke had stated that YOJ had been strategically building the Board and Advisory structure with proven talent across technology, supply chain, automation, and finance and capital markets. He also added that David happens to be a great addition to the advisory structure.

Signing of SaaS Agreement with Geodis: Yojee Limited had made an announcement of 3-year master services agreement, which is subject to standard termination provisions, with the global logistics provider named Geodis Singapore Pte Ltd. It was also noted that, subject to any termination event occurring at the end of three years, the agreement would get renewed for the successive 12-month periods. The agreement would be governing multiple projects throughout the Asia Pacific where YOJ would be providing its SaaS logistics and supply chain management technology on a project by project basis on standard commercial terms over the span of three years. The setup, subscription, professional service, and transaction fees would be applicable.

In Yojee’s view, the impact of the master services agreement is not financially material because of variability and difficulty with regards to estimating the transaction volumes and project scopes.

Announcement of Cancellation of Securities: Yojee had recently made an announcement that it had cancelled 2,000,000 incentive performance rights which were previously issued in accordance with incentive performance rights plan. Also, a total of 15,000,000 unlisted options expiring December 29, 2020 and exercisable at $0.20 have been cancelled following the employee departure.

Also, Yojee Limited had advised the changes to the Board of Directors. The company had announced that Mr. Gary Flowers had been appointed as Non-Executive Director. In addition to Mr. Flowers remuneration as a director, YOJ would seek to issue 3,000,000 unlisted options in the capital of the company. However, these would be subject to Mr. Flowers continuing to be the director at the time of vesting and shareholder and regulatory approvals. However, Mr. Jason Marinko had tendered his resignation from Board in order to pursue other commercial interests. The company’s Chairman named Ray Lee stated that, with recent additions to Board and Advisory Board, Yojee is well structured for the next phase of growth.

Signing of Three New Software Customer Contracts: During the quarter ended March 2019, Yojee had stated that three new software customer contracts were signed which included one National Leader and two SMEs across 2 countries plus Enterprise customer contract upgrade. The company added that the group is confident that the pace in which global key accounts progress is in accordance with the market norms for large scale SaaS deployments of core operating technology. The company is also working to shorten the lead times by the introduction of white glove, project management, and adoption programs in the business. In the quarter ended March 2019, the company had rolled out numerous partnership agreements in the countries like Australia, Indonesia as well as in Dubai, UAE (which is new territory for YOJ).


Yojee Product Offering and Key Features (Source: Company Reports)

SendYojee witnessed a strong quarter, and there was approximately 40% growth on the YoY basis as it achieved 8,194 deliveries in Singapore between Yojee and its downstream partners as compared to 5,924 in the same quarter of the last year. The company stated that, traditionally, the first quarter of the calendar year is slow after Singles Day, Black Friday and Christmas peak, along with around 3 weeks of Chinese New Year break which slows down global freight market. The company had rolled out Power Planner in the month of March as another module to complement the propriety product suite, and it also launched BoxApp during the quarter.

What To Expect From YOJ Moving Forward: Following the end of March 2019 quarter, Yojee Limited secured numerous new accounts which include a new marquee customer in Malaysia which enables the expansion of SendYojee network to Malaysia. The company is starting to gain traction with dual revenue stream customers who are Software and SendYojee Freight Customers. As a result, it enables the visibility and seamless freight volume scalability along with access to more delivery service types.

Also, we expect that the company is expected to be benefitted by the strong liquidity position (as evident from 1H FY 2019 current ratio) and lesser reliance on debt (can be seen from 1H FY 2019 Assets/Equity ratio). The company had witnessed a CAGR growth of 65.49% in its total revenues in the past five years (i.e., from FY 2014- FY 2018), which reflects its strong revenue generation capabilities.

Stock Recommendation: The stock of Yojee Limited had delivered the return of 42.86% in the span of past six months while, in the time frame of previous three months, it posted the return of 44.93%. On November 14, 2018, the company had made an announcement about the material upgrade with respect to its existing relationship with customer Aero Line Services Sdn Bhd. The upgrade sees YOJ act as an exclusive technology partner to Aero Line Services for the fleet and delivery management during term of the agreement which is 36 months commencing on November 15, 2018.   

Also, in the March 2019 quarter, the company’s cash receipts amounted to A$0.188 million which can be considered at respectable levels and that too in a quarter which is traditionally considered as a slow quarter reflects that company’s prudent operational capabilities which might attract the attention of the market players. However, the primary risk from the company’s financial instruments happens to be the cash flow interest rate risk. Currently, the stock is trading slightly below the average of 52 week high and low prices of around $0.1125 with a beta of 0.83x (5-Years, Monthly), proffering a decent opportunity for accumulation. Hence, considering the aforesaid facts and current trading level, we give a “Speculative Buy” recommendation on the stock at the current market price of A$0.105 per share (up 5% on 7 June 2019).


YOJ Daily Chart (Source: Thomson Reuters)

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