Bigtincan Holdings Limited

BTH Details

Q3FY22 Financial Summary: Bigtincan Holdings Limited (ASX: BTH) provides a leading AI-powered sales enablement automation platform. The below picture provides an overview of the business updates:

Key Business Updates (Source: Analysis by Kalkine Group)

Insights of Q3FY22: The following picture gives a broader idea of the company’s performance in Q3FY22:

Financial Summary (Source: Analysis by Kalkine Group)

Key Risks: The company’s performance could be affected by the rising market share of peers as it operates in the competitive industry. In addition, any extreme change in technology could affect business growth.

Outlook: For FY22, the company anticipates maiden positive adjusted EBITDA on the back of ongoing growth and benefits of scale and efficient operations. In addition, BTH intends to establish a vertical market unit focused on Industrials, which is likely to add revenue and leave a positive impact on EBITDA in FY23. The company is focused on achieving or surpassing $119 million in ARR and $109 million in revenue in FY22.

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 company is trading below its 52-week low-high average of $0.485 - $1.530, respectively. The stock of BTH has been corrected by ~29.93% in the past month. The stock has been valued using an EV/Sales multiple-based illustrative relative valuation and arrived at a target price of low double-digit upside (in % terms). The company can trade at a slight discount to its peers, considering the COVID-19 uncertainties and losses in business. For the purpose of valuation, peers such as Nearmap Ltd (ASX: NEA), ELMO Software Ltd (ASX: ELO), and Adacel Technologies Ltd (ASX: ADA) have been considered. Considering the indicative upside in valuation, joining on oracle PartnerNetwork, rising cash receipts, the launch of new products, decent outlook, current trading level and key risks associated with the business, we recommend a ‘Speculative Buy’ rating on the stock at the closing market price of $0.550, up by ~2.803% as on 18 May 2022.

Markets are trading in a highly volatile zone currently due to certain macroeconomic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

BTH Daily Technical Chart, Data Source: REFINITIV 

Spirit Technology Solutions Ltd

ST1 Details

Business Updates: Spirit Technology Solutions Ltd (ASX: ST1) is engaged in the provisioning of IT&T services, which include the provisioning telecommunication services, cloud services, managed IT services and cyber security services. The below picture showcased an idea of key business updates:

Business Updates (Source: Analysis by Kalkine Group)

Q3FY22 Highlights: The following picture gives an overview of the Q3FY22 trading update:

Trading Updates (Source: Analysis by Kalkine Group)

Key Risks: ST1’s business could be affected by the risk arising from the failure to maintain cybersecurity. The company continue to witness ongoing cost pressures, supply-side delays, and business disruptions due to COVID-19 uncertainties.

Outlook: During March 2022, the company raised prices (5%-15%) to improve margins across Spirit IT&T and Trident business, which is likely to deliver increased revenue over the next 12 months. The company expects 2HFY22 revenue to be $75 million, which may lead the full-year revenue to ~$140 million.

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 ST1 is currently trading near its 52-week low level of 0.056, offering a decent opportunity for accumulation. The stock has been corrected by ~56.29% in the past month. The stock has been valued using a P/E Multiple based illustrative relative valuation method and arrived at a target price of low double-digit upside (in % terms). The company can trade at a slight discount to its peers, considering the COVID-19 uncertainties and negative operating margin. For the purpose of valuation, peers such as Vonex Ltd (ASX: VN8), Spark New Zealand Ltd (ASX: SPK), Telstra Corporation Ltd (ASX: TLS), and others have been considered. Considering the expected upside in valuation, growing revenue, focus on margins, decent outlook, current trading levels, and key risks associated with the business, we recommend a ‘Speculative Buy’ rating on the stock at the closing market price of $0.057, down by ~8.064% as on 18 May 2022.

Markets are currently trading in a highly volatile zone due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.

ST1 Daily Technical Chart, Data Source: REFINITIV 

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 for 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 stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in stock prices tend to find resistance when they are rising, and a 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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