iCar Asia Limited

ICQ Details 

Revenue recovering to pre-COVID levels: iCar Asia Limited (ASX: ICQ) is focused on developing and operating leading automotive portals in Malaysia, Indonesia, and Thailand. As at 16 September 2020, the company had a market capitalisation of $138.05 million.

1HFY20 and 2QFY20 Key Updates: The company was able to achieve growth in sales in H12020, with revenues amounting to be ~$6.3 million, up 4% on pcp. This growth was accomplished despite major disruption in all three countries in which it operates due to COVID-19 led crisis. Loss from ordinary activities after tax came in at $6.1 million, an increase of 9% from the pcp. As at 30 June 2020, the company had cash and cash equivalent of $2.2 million with access to additional funds in the form of a $5.0 million debt facility that remains undrawn. The company remains on track to successfully implement cash collection initiatives and cost reduction programs across the Group. For the quarter, the company reported cash receipts of $6.96 million, down by 9% on the previous quarter. Over the period, the Listings and Account volumes witnessed marginal growth compared to Q2 2019.

Quarterly Highlights (Source: Company Reports)

What to expect: Currently, the company is focused on its core business segments of New Car and Used Car. It intends to launch iCar Suite in all markets with an enhanced dealer product. Further, it plans to launch new transactional formats for used car buyers and dealers. The outlook for the second half is looking significantly positive with the easing of business restrictions in Asia’s markets. The company expects demand to recover at its platforms and anticipates a quick rebound to its positive long-term trajectory. Further, it is joining hands with its key customers and dealers to develop strategies to leverage its digital assets to help drive their businesses forward. 

Stock Recommendation: In the last six months, the stock of ICQ has provided a return of 45.45% and is trading higher than the average 52 weeks price level band. On the technical analysis front, the stock has a support level of ~$0.28 and a resistance of ~$0.34. On a TTM basis, the stock of ICQ is trading at an EV/Sales multiple of 8.7x, lower than the industry median of 10.4x. Considering, the company’s focus areas, growth in H1 2020 sales numbers, easing Covid-19 restrictions, outlook, and valuation, we give a “Hold” recommendation on the stock at the current market price of $0.320 on 16 September 2020.

ICQ Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

ImpediMed Limited 

IPD Details 

IPD reports encouraging results with Y-o-Y revenue growth: ImpediMed Limited (ASX: IPD) is engaged in the development and sale of medical devices for diagnosing and monitoring human disorders and diseases. The company has a market capitalisation of ~$73.48 million as on 16^th September 2020.

Results Performance (Year ended 30 June 2020): For the year ended 30 June 2020, the company reported the revenue of $5.7 million, up 38% year over year. Loss from ordinary activities after tax stood at $21.4 million as compared to a loss of $23.9 million reported in the year-ago period. The company has significantly strengthened its balance sheet with closing cash balance at 30 June 2020 amounting to $19.7 million. The net operating cash outflow for the quarter period was reported at $19.2 million. 

Segment Performance: During the period, SOZO Revenue came in at $4.7 million, up a whopping 99% year over year. SOZO SaaS revenue stood at $3.4 million, up 110% year over year, demonstrating the strength of the recurring revenue from SOZO accounts. SOZO Annual Recurring Revenue increased 53% year over year and came in at $5.2 million. In FY20, SOZO SaaS gross margin increased steadily, with an 86% gross Margin in June 2020.

Segment Performance (Source: Company Reports)

Outlook: The company has taken cost reduction measures and has a phased plan in place to respond to potential impacts of the COVID-19. It has secured its supply chain and has increased its distribution points. IPD is in a unique position to monitor customer data. The company expects SOZO SaaS gross margins to be more than 90% in FY21. There are more than 450,000 US dialysis patients and Centers for Medicaid and Medicare Services expects in excess of 44 million dialysis treatments in 2021. The company recognizes SOZO’ potential to offer a reliable scientific way of calculating dry weight thereby reducing hospitalisations resulting from fluid overload.

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

EV/Sales Multiple Based Valuation (Source: Refinitiv, Thomson Reuters)

Note: All forecasted figures and peers have been taken from Thomson Reuters, NTM-Next Twelve Months

Stock Recommendation: Over the last six months, the stock of IPD has provided a return of 22.66%. However, it is inclined towards its 52 weeks low price, offering a decent opportunity for accumulation. On a technical analysis front, the stock has a support level of ~$0.035 and resistance of ~$0.082. We have valued the stock using the EV/Sales multiple based illustrative relative valuation method and arrived at a target price of an upside of low double-digit (in % terms). For the purpose, we have taken peers like Nanosonics Ltd (ASX: NAN), Next Science Ltd (ASX: NXS), Universal Biosensors Inc (ASX: UBI). Considering the company’s focus on cost rationalisation, its decent balance sheet, valuation and current trading levels, we give a “Speculative Buy” recommendation to the stock at the market price of $0.07, down by 1.408% on 16 September 2020. 

IPD Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

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