iCar Asia Limited

ICQ Details

YTD April FY21 Financial Performance: iCar Asia Limited (ASX: ICQ) operates and owns the network of the automotive portal that provides a platform for car buyer and sellers in South East Asia. The market capitalisation of the company as on 11 June 2021 stood at ~$126.67 million. As per a recent financial update, the company has recorded a revenue gain of 37% to ~$5.8 million in YTD April FY21, compared to ~$4.2 million on YTD April FY20 driven by car trading business in Malaysia.  During the period, the company has narrowed down its EBITDA loss by ~34% to~$1.8 million, compared to a loss of ~$2.7 million on YTD April FY20. 

YTD April 2021 Financial Performance (Source: Company Reports)

Outlook: The company is actively engaged in cross-promotion of new car clients, combined pricing for a used car, and expansion of transactional business, which might give a revenue push to the company.  

Key Risks: Due to the COVID-19 pandemic, the demand for cars has subdued, which impacted the company's sales and still, economic risk prevails in the near-term future. In addition, the lockdown is imposed in some of the global markets, which could affect logistics. 

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

Data Source: Refinitiv, Thomson Reuters, 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: As per a recent update, the company has commenced a loan facility of $10 million with Catcha Group in 2021. The stock of ICQ is trading below its average 52-weeks' levels of $0.230-$0.450. The stock of ICQ gave a positive return of ~9.43% in the past one month and a negative return of ~24.67% in the past six months. We have valued the stock using an EV/Sales multiple-based illustrative relative valuation and have arrived at a target price of low double-digit upside (in % terms). We believe that the company can trade at some premium to its peer average EV/Sales (NTM Trading multiple), considering the decent financial performance and strong rebound in operating metrics. For this purpose, we have taken peers such as GUD Holdings Ltd (ASX: GUD), Carsales.Com Ltd (ASX: CAR), Hipages Group Holdings Ltd (ASX: HPG), to name a few. Considering the current trading levels and expected upside in valuation levels, economic recovery, strategic advertising, effective cost management and the key risks associated with the business, we recommend a 'Speculative Buy' rating on the stock at the current market price of $0.290, as on 11 June 2021.

ICQ Daily Technical Chart, Data Source: REFINITIV

PlaySide Studios Limited

PLY Details

Signed Agreement for The Godfather: PlaySide Studios Limited (ASX: PLY) is a technology-based company that develops mobile video games and collaborates with studios, such as Disney, Pixar, Warner Bros, and Nickelodeon. The market capitalisation of the company as of 11 June 2021 stood at $102.62 million. As per a recent announcement, the company has signed a licence agreement with Paramount Pictures to develop and publish 'The Godfather’ mobile video game, the second major license after adding the ‘Legally Blonde’ license with MGM. 

Q3FY21 Financial Performance: During the quarter, the company has recorded an increased revenue (unaudited) by 71% to $2.73 million, compared on a pcp basis. The company has made a significant mark in the company's history by surpassing 9.3 million downloads of Animal Warfare. PlaySide has reported a decrease in cash reserves by $2.74 million to $13.33 million during the quarter. 

Q3FY21 Cashflow from Operating Activities (Source: Company Reports)

Outlook: The company has signed an agreement with Click Management and leading influencers LazarBeam and Fresh is expected to be launched in FY22. PlaySide is expanding its international presence with strategic and operational execution and has been investing heavily in the US market.

Key Risks: The business is exposed to technology risk, IP risk and cybersecurity. Therefore, the company should invest in technology and R&D to keep it updated and secured.

Stock Recommendation: As per a recent update, the company has launched its first-ever MMO title in partnership with Norris Nuts on PC, Mac & Mobile. The stock of PLY is trading below its average 52-weeks' levels of $0.260-$0.490. The stock of PLY gave a negative return of ~11.47% in the past one month and a negative return of ~22.85% in the past three months. On a TTM basis, the stock of PLY is trading at an EV/Sales multiple of 1.8x, lower than the industry median (Technology) of 5.4x. Considering the current trading levels and valuation on a TTM basis, the strategic partnerships, decent cash balance, increase in revenue, strong demand and the key risks associated with the business, we recommend a 'Speculative Buy' rating on the stock at the current market price of $0.270, down by ~3.572%, as on 11 June 2021.

PLY 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.

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