Respiri Limited

RSH Details

UK Penetration and Takeover Update: Respiri (ASX: RSH) is a Melbourne-based commercial-stage digital health care technology company, listed in 2004. The company is primarily involved in the research and development and further commercialization of non-invasive devices and medical mobile health applications. In a recent update, the company’s wheezo product has been approved for sale in the UK market. The official launch is expected in Q4 FY21.  In a move to acquire Adherium, RSH submitted the bidder’s statement on June 15, 2021, strongly recommending Adherium shareholders to accept the offer. As per the offer, RSH offered to acquire Adherium shares at 2.25 cents, a 50.2% premium to the closing price as of April 28, 2021.

Q3 FY21 Trading Update: During the quarter, RSH onboarded three pharmacy banner groups covering about 1,000 stores (covering 22% of total Australian pharmacies). It is expecting to stock wheezo by over 2,000 pharmacies by June 2021. It had appointed Dr. Andrew Weekes as a strategic advisor to the Board. During the period, RHS received clearances from the Food and Drug Regulator for wheezo to be marketed in the US market. The company posted operating cash outflows of $1.6 million, an improvement of 36% over the preceding quarter. It had kept R&D expenses downwards by $0.15 million. Production and operating costs were also declined by 76% (QoQ). It had closed the period with a cash balance of $9.86 million.

Cash Flow from Operations (Source: Company Reports)

Key Risks: RSH is exposed to various governance issues for exports and compliance of drugs. One of the major inherent risks is the uncertainty of patent protection and proprietary rights during various trials.  

Outlook: RSH is expected to lose out ~$6-8 million of SAAS subscription for FY21 due to lockdowns and vaccination rates. Nevertheless, the management is optimistic to cover 44% of community pharmacies with wheezo. It is also expecting to drive down manufacturing costs and align sales strategies effective second half of the current year.

Stock Recommendation: Over the last month, the stock of RSH went down by ~26.26%. The stock made a 52-weeks’ low and high of $0.071 and $0.250, respectively. On a TTM basis, the stock of RSH is trading at an EV/Sales multiple of 39.1x lower than the industry (Healthcare Equipment and Supplies) average of 57.3x. Considering the expansion in the UK and US markets, cost reduction strategies, cash balance, current trading levels, and valuation based on TTM, we give a ‘Speculative Buy’ rating on the stock at the current market price of $0.073, down by ~2.667% as on 16 June 2021.

RSH ARX Daily Technical Chart, Data Source: REFINITIV

Fatfish Group Limited

FFG Details

Acquisitions to Spearhead the Growth: Fatfish Group Limited (ASX: FFG) is a venture firm with a strong presence in the Australian, Asian, and Nordic region backed by cutting-edge technology and entrepreneurial mindsets. FFG diversifies its product base from consumer internet to the blockchain, video games, esports, and fintech, making it an upcoming leader when the global landscape has changed dynamically, creating software and fintech industry as the leading segment. FFG to acquire full ownership in BNPL Next Ltd. for $4.14 million to gain access to Earned Wage Access (EWA) business in Southeast Asia. BNPL owns Circopay platform that has paid out more than $500,000 to employees via EWA. In addition, FFG acquired a 55% stake in Pay Direct Technology Sdn Bhd, a Southeast Asia-based that processes online payments.

Q1FY21 Trading Update: FFG’s portfolio company, Smartfunding Pte Ltd. rolled out BNPL services in Singapore and South Asia providing working capital loans to small and medium businesses. It had posted cash outflow from operations of $236k for the quarter ending March 2021. It had closed the quarter with a cash balance of $522,000. FFS has adequate liquidity with unused bank facilities of $8.0 million.

Key Risks: Increasing competition as BNPL space is getting crowded. The payment gateways business is highly regulated and mandated with strict governance. Interest rates and discretionary spending may affect the spending habit.

Outlook: FFG plans to strengthen its reach in South Asia through Circopay platform that has recently forged an alliance with Paygroup for EWA services. Circopay raised over $1 million to broaden EWA services.

Stock Recommendation: Over the last month, the stock of FFH went down by ~12.2%. The stock made a 52-weeks’ low and high of $0.006 and $0.43, respectively. On a TTM basis, the stock of FFG is trading at a Price-to-Book Value multiple of 3.8x higher than the industry (Financial Sector) median of 1.3x. Considering the expansion in BNPL through series of acquisitions, solid liquidity, and higher ROE posted in FY20 over pcp, the current trading levels, we give a ‘Speculative Buy’ rating on the stock at the current market price of $0.072, down by ~4.00% as on 16 June 2021.

FFG ARX Daily Technical Chart, Data Source: REFINITIV

Note: The purple color line in the chart shows RSI (14-period) and the white color line represents the trend line. The upper 2 yellow color lines denotes Resistance 1 and Resistance 2, while the lower 2 yellow color lines denote support 1 and support 2.

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.

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.

Disclaimer - This report has been issued by Kalkine Pty Limited (ABN 34 154 808 312) (Australian financial services licence number 425376) (“Kalkine”) and prepared by Kalkine and its related bodies corporate authorised to provide general financial product advice. Kalkine.com.au and associated pages are published by Kalkine.

Any advice provided in this report is general advice only and does not take into account your objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your objectives, financial situation and needs before acting upon it.

There may be a Product Disclosure Statement, Information Statement or other offer document for the securities or other financial products referred to in Kalkine reports. You should obtain a copy of the relevant Product Disclosure Statement, Information Statement or offer document and consider the statement or document before making any decision about whether to acquire the security or product.

You should also seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice in this report or on the Kalkine website. Not all investments are appropriate for all people.

The information in this report and on the Kalkine website has been prepared from a wide variety of sources, which Kalkine, to the best of its knowledge and belief, considers accurate. Kalkine has made every effort to ensure the reliability of information contained in its reports, newsletters and websites. All information represents our views at the date of publication and may change without notice.

Kalkine does not guarantee the performance of, or returns on, any investment. To the extent permitted by law, Kalkine excludes all liability for any loss or damage arising from the use of this report, the Kalkine website and any information published on the Kalkine website (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine hereby limits its liability, to the extent permitted by law, to the resupply of services.

Please also read our Terms & Conditions and Financial Services Guide for further information.

On the date of publishing this report (referred to on the Kalkine website), employees and/or associates of Kalkine do not hold interests in any of the securities or other financial products covered on the Kalkine website.