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

Foundational Year for YOJ: Yojee Limited (ASX: YOJ) is a small-cap logistic technology company with the market capitalisation of ~$61.86 Mn as of 25 October 2019. FY19 witnessed a foundational year for the company, with the release of version two platform, which takes the company to a leading edge of the industry. The company’s proprietary, innovative technology has moved it from the idea stage to signing and working with some of the largest companies in the world. Revenue from ordinary activities increased by 99% to $1,375 k, as compared to the previous year. Net loss for the period attributable to members increased by 35% to $3,716 k, as compared to the previous. The comprehensive loss can be attributed to the costs incurred on employee benefits, income tax expense, and exchange difference on translation of foreign operations. It stated that the company has released a version two product which helped it position itself better in 2019 and it is focussing on the customer and customers’ requirements via feedback and user behaviour data. Not so long ago, the company has also released the information for the three months to June 2019. The company key personnel stated that the quarter was a pivotal one where the company’s efforts to create a lean, agile business along with the scalable global platform were validated. It was further added that the acquisition of new customers like global leader Geodis and another nine customers shows the platform heading towards critical mass at a rapid pace. The company added that it recorded cash receipts amounting to A$192,000 (reflecting a rise from $188,000), which was the highest for any quarter to date. The onboarding, as well as recurring revenue from the new major clients signed in the quarter, have already commenced to flow in the upcoming quarter. The company has signed a three-year agreement with Geodis in order to govern multiple projects throughout the Asia Pacific setting out standard commercial terms, which was announced on May 15, 2019.

At the end of June 30, 2019, the company’s total current assets stood at $3,573,285, which reflects a rise from June 30, 2018 figure of $2,309,101. Its cash and cash equivalents stood at $3,406,410 at the end of June 2019, which implies a rise from June 30, 2018 figure of $2,039,192. A rise in the company’s cash levels might help it achieving decent levels of growth moving forward, which could help it in getting traction among the market players. 

YOJ would be providing SaaS logistics and supply chain management technology on a project by project basis with the applicable setup, subscription, professional service and transaction fees. It was also added that the company received first payments of setup and subscription fees, and it is actively implementing technology and applicable integrations. There are expectations that respectable liquidity levels, decent capabilities to garner revenues and build cash levels might act as tailwinds for long-term growth. 


FY19 Income Statement (Source: Company Reports)

Improvement in Key Margins: The company’s key margins have witnessed an improvement in FY19 on a YoY basis, which reflects that YOJ is possessing a decent base of fundamentals, which might help the overall company in achieving long-term growth prospects. The company has a current ratio of 5.35x in FY19, which is higher than the industry median of 1.82x and, therefore, it can be said that YOJ could meet its short-term obligations in a better way as compared to the industry. Also, the fundamental aspects in terms of liquidity etc. might help YOJ in making deployments towards strategic growth objectives, which could help in long-term growth.


Key Metrics (Source: Thomson Reuters)

Inked a Multi-Year Minimum Value Contracts of $175,000 – Support Top-line Growth: Yojee Limited has made an announcement with respect to the progress in 2 new verticals that include 5 new clients signed throughout Automotive Industry and Passenger Transport industry for the freight solutions. The company signed $175,000 in the multi-year minimum value contracts in order to continue to build a robust base throughout multiple large opportunity verticals since August 1, 2019. The company added that this refers to contracts’ fixed fee value only and does not include any kind of additional transaction and/or revenue share fees.

The company also stated that Giga Shipping SDN BHD, which is a Malaysian automotive logistics leader, selected YOJ to give transparency, visibility and optimisation throughout its supply chain.YOJ has started a three-year SaaS Services Agreement with GMG Group in order to fine tune its offerings applicability to the automotive industry, which would soon reach close to $500 Bn in size with hundreds of major players. It was further stated that the total value of an agreement can’t be determined as it is subject to the utilization take-up and any additional deployments.

SendYojee Witnessed 4,866 Deliveries: In the activity report for the quarter ended June 2019, it was mentioned that SendYojee has continued to attract the clients seeking a viable solution to cater for the higher freight network volumes. It was further added that SendYojee encountered 4,866 deliveries, which were logged in Singapore between Yojee and its new group of downstream partners. The SendYojee freight network converted an outstanding six traditional logistics companies to the SaaS customers. In the release, it was mentioned that this enables their seamless participation as carriers for network, resulting in the decrease of their operating cost as well as risk, while at the same time, providing visibility on par with any sharing economy platform.

Decent Capabilities to Generate Revenues: The company’s total revenues have witnessed a CAGR growth of 94.29% in the time span of FY15- FY19, which implies that YOJ is possessing decent capabilities to garner revenues and these capabilities might help it in achieving long-term growth objectives. Between FY17- FY19, the company’s cash receipts have witnessed an increase and, therefore, it can be said that YOJ has respectable capabilities to build cash levels. There are expectations that the capabilities to garner revenues and build cash levels might help it in achieving long-term growth.


Key Valuation Metrics (Source: Thomson Reuters)

What to Expect from YOJ Moving Forward: YOJ has released a version two product which helped it position itself better in 2019 and it is focussing on the customer and customers’ requirements via feedback and user behaviour data. After onboarding of the new major clients and with the health of the current pipeline, the company is expecting a positive year ahead with robust growth and addition of new key accounts and continued revenue growth. In the activity report for the quarter ended June 2019, the company has stated that there has been continued growth in the cash receipts and 10 new significant software customer contracts have been signed, as well as cash outflows have been down 40% since Q1 of the financial year. The company has been strengthening its board and advisory board, and there have been strategic additions for an experienced, well-rounded group of experts, which are positioning the company for scale. There are expectations that these developments might help the company in getting traction among the market participants.
 

Stock Recommendation: The company’s stock has witnessed a fall of 2.67% in the time span of previous one month, while in the past three months, the stock has encountered a fall of 39.17%. As per ASX, the stock is trading at the lower band of its 52-week trading range of $0.053 - $0.140, proffering a decent opportunity for accumulation. The company has released a technology platform, which happens to be globally unique, commercially competitive as well as industry validated. The company has been maturing and refining the sales as well as marketing programs based on the market feedback and success rates, looking to drive down cost and time to acquisition as well as increase the conversion rates. Given the backdrop of aforesaid facts and current trading levels, we give a “Speculative Buy” rating on the stock at the current market price of $0.073 as on 25 October 2019.

 
YOJ Daily Technical Chart (Source: Thomson Reuters)

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