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

Decent Performance and Outlook: Yojee Limited (ASX: YOJ) happens to be a company which is focused on developing a sharing-economy based logistics technology via creation of Yojee delivery network and secured blockchain technology platform. As on July 26, 2019, the market capitalisation of Yojee Limited stood at ~A$97.46 million. The company earlier released its activity report for the quarter ended March 2019 in which it witnessed robust growth in the cash receipts of 39% to A$188k. The company added that after the 2018 major upgrade of the technology offering, it continued to grow the new customer and delivery numbers, together with growing the pipeline of the global key accounts proving that the company has the potential to scale even further. The company’s Managing Director, Ed Clarke stated that the company has reached the point of widespread market validation of the integrated product offerings and their scalability. The company is witnessing high levels of interest and take up from the sole traders through all the levels of organisations up to national and international market leaders. Based on product validation, the focus of the company happens to be on profitable growth. During the quarter ended March 2019, YOJ signed three new software customer contracts, which included 1 National Leader and 2 SMEs across two countries plus an Enterprise customer contract upgrade. During March 2019 quarter, the company’s net cash used in operating activities amounted to $1.35 million and it incurred $0.649 million towards the payments for product manufacturing and operating costs. Also, during the same period, A$0.502 million were incurred towards administration and corporate costs. Moreover, the company has achieved a decent growth path from FY14 top-line of $60,617 to $4,49,474 in FY18, posting a CAGR growth of 65.0% over FY14-FY18, which represents that the company has decent revenue generation capabilities.

Moving forward, sound liquidity levels, decent capabilities to generate revenues and respectable base of total current assets are expected to support the company’s business activities and might help it in gaining traction among the market players. Also, the company has been approached by numerous global bus companies which could support the company’s core business operations.
 

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: Thomson Reuters)

Improvement Witnessed in YOJ’s Key Margins: The key margins of Yojee Limited witnessed improvement in 1H FY19 on a YoY basis and, as a result, it looks like that the company’s financials have also been improved over the same time period. The company has sound liquidity position which is evident from its 1H FY 2019 current ratio of 12.47x which is higher than the industry median. It appears that the liquidity position might help the company in making deployments towards key strategic business objectives and it may convert its receivables to cash a bit efficiently as it recorded a reduction in cash conversion cycle from 1,608.4 days in FY15 to 113.7 days in FY18.

Key Metrics (Source: Thomson Reuters)

Three Year SaaS Agreement Signed: Yojee Limited has made an announcement about 3-year master services agreement with the global logistics provider named Geodis Singapore Pte Ltd. Additionally, it was stated that if the termination event does not occur, at the end of 3 years, the agreement would get renewed for the successive 12-month periods. It was also mentioned that the agreement would be governing multiple projects throughout Asia Pacific where YOJ will be providing SaaS logistics and supply chain management technology on the project by project basis on the standard commercial terms over three years, and setup, subscription, professional service as well as transaction fees would be applicable.

Announcement About Appointment of David Morton: Yojee Limited has made an announcement about the appointment of David Morton to the advisory board team which has been recently announced. The release also stated that David Morton happens to be an experienced Corporate Banker and has a successful career of 40 years at the Westpac as well as HSBC. Additionally, David Morton has a rich amount of experience throughout leadership and planning, compliance, sales and marketing across the wide range of the businesses, cultures as well as geographies.

Overview of Corporate Update: Yojee Limited has recently shared a corporate update as the company has strengthened the team in the past few months. The company appointed Gary Flowers as Non-Executive Director on May 1, 2019. Gary happens to be an experienced addition to Board and has an extensive senior legal and finance background operating across some of Australia's leading organisations, which includes property funds management as well as professional services in listed and unlisted companies. Additionally, the company established advisory board which brings together a broad diversity of the unique global skills providing well-rounded perspectives which support YOJ’s growth strategies and further enhancing the business moving forward. 

In the month of June, Board and Advisory Board met in Singapore for the comprehensive 3-day program which was accompanied by the set of objectives and deliverables that feed into the company’s immediate and mid-term strategy. The focus consists of Asia Pacific growth, customer success as well as channel partner initiatives.

Enterprise Grade Technology Has Achieved First Payments: As per the release dated July 11, 2019, YOJ’s innovative enterprise grade technology has achieved first payments from 3 large verticals, which includes its global top ten logistics customer where monthly recurring fees and setup fees have started being received from the customer. As per the release, the Global Third-Party Logistics Market has been estimated at $1.23 trillion. In support of the key projects as well as enterprise strategies, the company secured a Senior Executive named Paul Bell to oversee deployment of the key projects in order to support the rapid transformation as well as adoption process with engagement throughout management and operational staff.

Additionally, it was stated that Landmark Group has decided to continue with Yojee post the successful pilot testing where YOJ’s software was supported in Malaysia. The following picture provides an idea of the Yojee Omni-Model:

Omni-Channel Retail (Source: Company Reports)

What To Expect From Yojee Limited Moving Forward: Yojee’s Version 2 software happens to be so flexible and capable that it has been able to help use cases beyond the traditional freight logistics. YOJ is pioneering work with Australian passenger transport customer to utilise its artificial intelligence and web and mobile apps for the day to day operations. The passenger transport industry, which is a $54 billion industry globally, is also an industry which is dominated by the legacy technology with little next generation technology penetration. After the success of first transport customer, YOJ has been approached by numerous global bus companies looking to use the Yojee technology when it comes to planning as well as scheduling.

Also, there are expectations that the company might be supported by its robust liquidity position as its current ratio for 1H FY19 is significantly higher than the broader industry median. It looks like that the sound liquidity levels provide sufficient headroom to the company to make deployments towards growth initiatives which might attract the attention of the market players moving forward.


Key Valuation Metrics (Source: Thomson Reuters)

Stock Recommendation: The stock of Yojee Limited has delivered the return of 88.52% in the span of previous six months, while in the time frame of past one month, the return stood at 29.21% which can be considered at respectable levels. From the analysis standpoint, the company’s top line has witnessed a CAGR growth of 65.0% in the time span of between FY14- FY18 and, thus, it can be said that the company is possessing robust capabilities to generate revenues.

Also, the company’s current asset base has been improved as its total current assets in FY 2014 were $1.56 million and in FY 2018 the figure was increased to $2.31 million which can be considered at decent levels. At 31 December 2018, YOJ held cash and equivalents of ~$6.0 Mn, up from A$2.03 million a year earlier, and had no debt. There are expectations that sound liquidity levels, robust capabilities to generate revenues as well as respectable current asset base might help the company in achieving long-term growth objectives. However, the company stated that the main risk arising from YOJ’s financial instruments is cash flow interest rate risk. Hence, considering the aforesaid facts coupled with decent outlook and current trading levels, we give a “Speculative Buy” recommendation on the stock at the current market price of A$0.115 per share.
 
 
YOJ Daily Chart (Source: Thomson Reuters)

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