Bravura Solutions Limited

BVS Details

Material Updates: Bravura Solutions Limited (ASX: BVS) offers digital enterprise software solutions for the wealth management, life insurance and funds administration industries with a global presence across the UK, Australia, New Zealand, Europe, etc. On 28 March 2022, Invesco Australia Limited ceased to be a substantial shareholder in BVS.

Key Metrics Growth for the Period ended 31 December 2021:

• The Wealth Management segment’s revenue and EBITDA increased by ~10% Y-o-Y and ~7% Y-o-Y, respectively, in 1HFY22. The Delta Financial Systems acquisition within the division attributed ~$4.1 million revenue contribution.
• The Funds Administration segment contributed ~23% Y-o-Y growth in revenue and ~49% Y-o-Y in EBITDA. The segment’s EBITDA margin rose from ~42% in 1HFY21 to ~51% in 1HFY22.

Growth in Key Metrics, Highlights; (Analysis by Kalkine Group)

Key Risks:  The company faces adverse global macro-economic conditions, market penetration risk, sector headwinds, and the risk of realising acquisition synergies.

FY22 Strategy & Outlook:

• BVS continues to focus on developing its strategy to expand the microservices portfolio, hybrid cloud capability, recurring revenue via long term contracts, and widen its total addressable market. It continues to explore a pipeline of additional acquisitive growth opportunities.
• BVS anticipates revenue to grow more than ~10% against FY21 and EBITDA to be ~$45 - $50 million in FY22.

Valuation Methodology: P/E Multiple Based Relative Valuation (Illustrative)

Source: Analysis by Kalkine Group

*% Premium/(Discount) is based on our assessment of the company’s NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

Stock Recommendation: The stock of BVS gave a negative return of ~29.71% in the past three months and a negative return of ~41.86% in the past six months. The stock is currently trading lower than the 52-weeks’ average price level band of $1.495 - $3.980. The stock has been valued using the P/E-multiple-based illustrative relative valuation method and arrived at a target price of low double-digit upside (in % terms). The company might trade at a slight discount than its peers’ average P/E multiple, considering the increased R&D spend, higher debt-to-equity ratio, integration risk, and technological risks. For this purpose of valuation, a few peers like Pushpay Holdings Ltd (ASX: PPH), Nuix Ltd (ASX: NXL), and Infomedia Ltd (ASX: IFM) have been considered. Considering the low trading levels, continued R&D investment, growth in key metrics, growing demand for microservices, BPaaS, cloud, consumption-based services, an indicative upside in valuation, and associated key business risks, we give a ‘Speculative Buy’ rating on the stock at the closing market price of $1.715, down by ~1.720%, as of 5 April 2022. Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

BVS Daily Technical Chart, Data Source: REFINITIV 

Airtasker Limited

ART Details

Latest Updates & 1HFY22 Key Metrics: Airtasker Limited (ASX: ART) provides a community marketplace via an online outsourcing platform that connects local taskers and users in Australia.

• ART was effectively removed from the All Ordinaries (XAO) index on 21 March 2022 in a quarterly review of the ASX Indices.
• The GMV (gross marketplace volume) rebounded strongly in Q2FY22, up by ~39% Q-o-Q, thereby taking the GMV to ~$83.6 million in 1HFY22.
• The GMV growth was aided by a customer acquisition rise in Q2FY22 (up ~8.9% Y-o-Y in December 2021) and ~24% Y-o-Y growth in the average task price in December 2021.

Comparative Earnings Position; Highlights (Analysis by Kalkine Group)

Key Risks: The company faces the risk of an increase in taskers on its platform, profitability risk, industry competition, and expansion in new markets.

Outlook: ART is increasing its marketing and product development spending and expanding in the US and the UK markets. It upgraded the previously provided GMV guidance from ~$105 million to ~$107 - $110 million in 2HFY22, backed by the underlying GMV growth trajectory.

Valuation Methodology: EV/Sales Multiple Based Relative Valuation (Illustrative)

Source: Analysis by Kalkine Group

*% Premium/(Discount) is based on our assessment of the company’s NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

Stock Recommendation: The stock of ART gave a negative return of ~29.41% in the past three months and a negative return of ~37.49% in the past six months. The stock is currently trading near its 52-weeks’ low level of $0.595. The stock has been valued using the Enterprise Value to Sales based illustrative relative valuation method and arrived at a target price of low double-digit upside (in % terms). The company might trade at some discount than its peers’ median EV/Sales multiple, considering its negative operating cashflows in 1HFY22, continued net losses and negative ROE. For valuation, a few peers like Seek Ltd (ASX: SEK), Domain Holdings Australia Ltd (ASX: DHG), and RMA Global Ltd (ASX: RMY) have been considered. Considering the current trading levels, growth in GMV, customer acquisition, upgraded GMV guidance for 2HFY22, expansion plans for the US and the UK markets, an indicative upside in valuation, and associated key business risks, we give a ‘Speculative Buy’ rating on the stock at the closing market price of $0.600, down by 2.440%, as of 5 April 2022. Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

ART Daily Technical Chart, Data Source: REFINITIV 

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

Note 2: Investment decision 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 Valuation has been achieved and subject to the factors discussed above.

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.

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 and its related entities do not hold interests in any of the securities or other financial products covered on the Kalkine website unless those persons comply with certain safeguards, procedures, and disclosures.

Kalkine Media Pty Ltd, an affiliate of Kalkine Pty Ltd, may have received, or be entitled to receive, financial consideration in connection with providing information about certain entity(s) covered on its website.