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 Rise in Revenues and Reduction in Losses: Yojee Limited (ASX: YOJ) happens to be a company which is focused on developing the sharing-economy based logistics technology via creation of Yojee delivery network and a secure blockchain technology platform. As on September 6, 2019, the market capitalisation of Yojee Limited stood at ~A$71.18 million. In FY19, Yojee Limited has posted revenues from ordinary activities amounting to A$1.37 million which reflects a significant rise of 99% while its loss after tax attributable to members amounted to $3.7 million in FY19 which reflects a fall of 35% on a YoY basis. Out of the total revenues, the company’s trade revenue stood at A$0.508 million in FY19, reflecting an increase from the previous year’s figure of A$0.424 million. As per the company’s release, it is continually maturing and refining the sales and marketing programs based on the market feedback and success rates and it is also looking to continually drive down the cost and time to acquisition and increase conversion rates. YOJ has a healthy and advanced customer pipeline and a strong partner network being built throughout the world. Some of these are: DB Schenker, Wharf Cartage, Telstra, SILA Global, MCM Logistic, Landmark Logistic, LWE Logistic, etc. Recently, in the company’s reports, it was mentioned that the proprietary, innovative technology of Yojee has moved it from the idea stage to signing and working with some of the largest companies. This seems to be a positive for the company. As per the Managing Director, the company has released the technology platform, which happens to be globally unique, commercially competitive as well as industry validated. The Managing Director is optimistic as this has been done while streamlining the costs and showing consistent growth with regards to the receipts and reduction in the spend. 

Moving forward, there are expectations that sound capabilities to garner net sales and decent balance sheet might attract the attention of the market players. We presume that YOJ will continue to sustain its growth momentum in the future on the back of innovating and enhancing product line, expanding market base and healthy clientele.


Customers and Partners (Source: Company Reports)
 
Top 10 Shareholders: The following picture provides a broader overview of the top 10 shareholders in Yojee Limited:

Top 10 Shareholders (Source: Thomson Reuters)

Improvement in Key Margins in 1H FY19: There are has been an improvement in YOJ’s key margins in 1H FY19 on a YoY basis, which could be considered as positive. The company’s current ratio stood at 12.47x in 1H FY19, which is significantly higher than the industry median of 1.58x and, therefore, it can be said that YOJ would be able to meet its short-term obligations. Additionally, decent liquidity levels also reflect that YOJ has sufficient headroom to make deployments towards the key strategic business activities. It can be said that these deployments might help the company in achieving long-term growth prospects. 


Key Metrics (Source: Thomson Reuters)

Automotive Logistics Market to Grow at a CAGR of 7.55%: Yojee Limited has recently made an announcement with respect to the progress in the two new verticals which includes 5 new clients signed throughout the Automotive Industry and Passenger Transport Industry for the freight solutions. The company has inked $175,000 in multi-year minimum value contracts in order to continue to build a robust base throughout multiple large opportunity verticals since August 1, 2019, this refers to contracts’ fixed fee value only and does not include any sort of additional transaction and/or revenue share fees.

In the release, it was also mentioned that Giga Shipping SDN BHD, which is a Malaysian automotive logistics leader, has selected YOJ to provide transparency, visibility and optimisation throughout its supply chain. Additionally, it was stated that Yojee has commenced 3-year SaaS Services Agreement with GMG Group in order to fine tune the offerings applicability to Automotive Industry, which would soon be reaching close to $500 billion in size with the hundreds of major players.

As per the company’s release, the automotive logistics market was estimated to be US$284.1 billion in 2018, and it has been projected to reach US$472.9 billion by 2025, at CAGR of 7.55%. It was stated that increasing vehicle production, upcoming infrastructure projects like Asia’s One Belt One Road initiative, as well as the advent of EVs (or electric vehicles) are major reasons for the market growth.

YOJ Possesses Robust Capabilities to Generate Net Sales: The net sales of Yojee Limited has witnessed a CAGR growth of 94.3% in the time span of FY15- FY19 and, thus, it can be said that YOJ is possessing decent capabilities to garner net sales which might help it in improving overall position in the long-term. The company’s cash receipts have been improving from the past few years and, therefore, it can be said that YOJ has decent capabilities to build cash levels. There are expectations that the capabilities to garner net sales and build cash levels might help the company in achieving growth over the long-term.

In the time frame of FY15- FY19, the company’s total current assets base has witnessed a CAGR growth of 22.03%, which might prove to be beneficial for the company moving forward and can also help it in gaining traction among the market players.

Growth in New Customer and Delivery Numbers: The company released its results for the quarter ended June 2019 in which it was mentioned that, following the release of 2.0 infrastructure, the company continued to grow the new customer and delivery numbers. Also, the pipeline of global key accounts is also growing. The company’s Managing Director named Ed Clarke reflected favourable views for the quarter ended June 2019 and stated that the quarter was a pivotal quarter where the company’s efforts to create lean, agile business along with scalable global platform were validated. Additionally, it was added that the acquisition of the new customers like global leader Geodis and another nine customers represents that the platform is heading quickly towards the critical mass.

The company has inked a 3-year agreement with Geodis in order to govern multiple projects throughout the Asia Pacific setting out standard commercial terms. YOJ would be providing its SaaS logistics and supply chain management technology on the project by project basis with applicable setup, subscription, professional service, and transaction fees. YOJ has received the first payments of setup and subscription fees during the quarter, and it is actively implementing technology and applicable integrations. YOJ is expecting significant opportunity as well as commercial upside achievable by working closely with the customer, along with the other opportunities with the multi-nationals which are in the pipeline.


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

What to Expect From YOJ Moving Forward: The company has a decent outlook ahead as it is advancing quickly with some of the largest customers and customer pipeline in one of the world’s largest industries after validation across a number of use cases. In a recent presentation, the company has given important information with respect to the outlook. It was stated that the World Economic Forum has identified $520 billion in the operating costs to be saved in the next decade with the help of digitisation. With respect to corporate development, internal innovation initiatives are delivering customer-focused product upgrades on the bi-weekly basis and YOJ offers the industry-leading features like control tower, analytics, and fleet optimisation.

The company has advanced sales pipeline throughout the multiple global leaders, and, it was stated that the network effect is beginning to create rapid growth.

Stock Recommendation: The stock price of Yojee Limited has witnessed a fall of 7.69% in the span of previous one month while, in the time frame of past three months, the stock has fallen 15.15%. However, in the span of the previous six months, the stock has witnessed a rise of 21.74%. Post onboarding of the new major clients and considering the health of current pipeline, the company’s key personnel has an optimistic outlook and there are expectations of robust growth along with the addition of new key accounts and the continued growth in revenue. Moreover, the company manages the liquidity risk by continuously monitoring forecast and actual cash flows and matching maturity profiles of the financial assets and liabilities. It aims at maintaining the flexibility in the funding by having in place operational plans in order to source further capital as required. Additionally, moving forward, there are expectations that the company might be benefitted by the sound capabilities to generate net sales.  Currently, the stock is trading slightly below the average of 52 weeks high and low levels of $0.140 and $0.053, respectively, proffering a decent opportunity for accumulation. Hence, in view of aforesaid facts, expectations of improved earnings, and current trading levels, we give a “Speculative Buy” recommendation on the stock at the current market price of A$0.090 per share (up 7.143% on 6 September 2019). 

 
YOJ Daily Technical Chart (Source: Thomson Reuters)

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