Vortiv Ltd

VOR Details

Vortiv Ltd (ASX: VOR) is a technology-based company and is engaged in investing and collaborating with promising businesses which hold commercialised solutions in the digital, cybersecurity, analytics, and cloud services space to develop value in the target opportunities together.

FY21 Results Performance (For the Period Ended 31 March 2021)

Increase in Revenue to $99K: The company has recorded revenue of $99K in the year FY21, a significant increase from the revenue of $4K achieved in FY20.

Sharp Rise in Profitability: The company has witnessed a significant rise in profit after tax to $10.41 million from $2.28 million in the prior year.

Dividend: The Board of Directors declared a fully franked dividend of 5.55 cents per share and it was paid on April 9, 2021.

Financial Snapshot (Source: Company Reports)

TSI India Management’s Performance

Revenue Rose 4% in FY21: VOR holds 24.89% investment interest in Transaction Solutions International (India) Private Limited (TSI India). TSI India Management has achieved revenue and underlying profit of AUD$13.5 million and AUD$3.8 million, respectively in the quarter ended 31 March 2021. For FY21, it has recorded 4% YoY growth in revenue to AU$48.7 million.

Sharp Uptick in Profitability: The company witnessed a significant rise in profit before tax by 145% to AUD$6.3 million in FY21 driven by an increase in commission rebate along with the benefits of lower maintenance costs and an increase in ATMs.

Outlook

The company is mulling on further acquisition and investment opportunities and is focused on progressing a transaction right away. The management has estimated sufficient cash flows to meet all commitments and working capital requirements until FY22.

Key Risks

Due to the uncertainty on the timing and value of cash flow activities, the company has not undertaken any further strategies or hedges to offset the financial risks. The company is also exposed to credit risk as well as liquidity risk, interest rate risks, among others. Changes in market interest rates would adversely impact its cash and cash equivalents.

Technical Overview:

Chart:

Source: REFINITIV

Note: Purple Color Line Reflects RSI (14-Period)

Stock Recommendation

The company’s current ratio at 2.84x in FY21 remained better than the industry median of 2.46x. This reflects the possession of better capabilities to meet its short-term obligations than its peer group. The stock increased by ~15.8% in 6 months. It has made a 52-week low and high of $0.029 and $0.068 per share, respectively.

Considering the aforementioned factors along with its sustained focus on acquisition opportunities, and the current trading levels, we give a “Speculative Buy” recommendation on the stock at the current market price of $0.039 per share (Australia Time: 3:36 pm) on 26^th July 2021.

Holista Colltech Ltd

HCT Details

Holista Colltech Ltd (ASX: HCT) is a research-driven biotech company and it was created by the merger of Holista Biotech Sdn Bhd and Colltech Australia Ltd. It is focused on delivering first-class natural ingredients, wellness products and leads in research on herbs and food ingredients.

Q1FY21 Performance

Significant Uptick in Operating Cash Flows: The company has witnessed significant improvement in net operating cash outflows to $17,000 compared with an outflow of $514,000 in the previous quarter and $798,000 in the PCP.

Healthy Sales Performance: Its Ovine Collagen remained the standout performer and the sales surged by 312% to $74,000 during the quarter compared to the PCP following the increase in customer orders. Notably, sales from Holista’s Healthy Food Ingredients division and Dietary Supplements business increased by 64% and 32%, respectively.

Statement of Operating Cashflow (Source: Company Reports)

Share Sale Update

HCT, on 9 July 2021, updated that it has completed the Unmarketable Parcel Sale Facility (UMP Facility) for holders with Unmarketable Parcels of fully paid ordinary shares in HCT (Shares). The overall number of shares sold under the UMP Facility stood at 3,259,416. However, 462,801 shares were retained by the shareholders.

Legal Dispute Update

The company, on 23 June 2021, announced that it has reached an amicable out-of-court settlement with Eight Mercatus USA in regard to a legal dispute. Both the parties jointly decided to terminate the partnership agreement with immediate effect without any claims against each other.

Secure State Grant

Bagged a $501,250 Grant: The company, 26 May 2021, declared that it has managed to bag a $501,250 grant from the Western Australian state government under its Collie Futures Industry Development Fund. However, the grant is subject to the implementation of a funding agreement between the company and the WA government, through the Department of Jobs, Tourism, Science and Innovation (JTSI).

Use of Proceeds: The company will utilise the grant to upgrade its collagen plant to produce medical-grade collagen for the global market.

Outlook

The management expects the continuation of positive operating conditions through 2021. Further, it is witnessing supportive global trends for growth across its entire business division. To be specific, the outlook for healthy food ingredients appears brighter as demand is expected to increase as a result of demographic change and the prospect that more countries would be adopting measures to combat the ever-increasing rate of obesity.

Meanwhile, the company expects that the improvement in iGalen performance would result in robust performance for its Infection Control Solutions business over the coming quarters. The company is also planning to launch its nasal balm and M3® industrial solution.

Key Risks

The group is susceptible to numerous financial risks like market risk (including foreign currency risk, price risk, and interest rate risk), credit risk, and liquidity risk.

Technical Overview:

Chart:

Source: REFINITIV

Note: Purple Color Line Reflects RSI (14-Period)

Stock Recommendation

The company holds a decent cash position and its cash and cash equivalent holdings at the end of Q1FY21 stood at $2.4 million. HCT believes its net operating cash position will continue to improve over the coming quarters, and the management remains confident that its cash reserve will be sufficient to aid its growth strategies in FY22.

Considering the aforementioned factors along with the positive outlook with the expectation of continued growth momentum in 2021, sustained focus on new launches as well as current trading levels, we give a “Speculative Buy” recommendation on the stock at the current market price of $0.061 per share (Australia Time: 3:38 pm) on 26^th July 2021.

Note 1: The reference data in this report has been partly sourced from REFINITIV.

Note 2: Investment decisions should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the analysis has been achieved and subject to the factors discussed above alongside support levels provided.

Technical Indicators Defined:-

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

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