IOUpay Limited

IOU Details

December 2020 Quarterly Highlights: IOUpay Limited (ASX: IOU), previously known as Isentric Limited, offers fintech and online commerce software and solutions to its institutional customers. As on 28^th January 2021, the market capitalisation of the company stood at ~$69.82 million. During the December 2020 quarter, the company’s receipts from customers increased quarter on quarter by 85% to $2,165 million. Over the quarter, the company signed Merchant Services Agreements with two of Malaysia’s largest Payment Gateway providers and a leading Bank. Operating cash outflow for the quarter stood at $834k. The company ended the quarter with a cash balance of $8.541 million.

December 2020 Quarter Operating Cash flow (Source: Company Reports)

Acquisition of Malaysian Money Lending Licence: On 19^th January 2021, it announced receipt of Malaysian Money Lending Licence 1951 by 100% acquisition of ordinary shares of an existing authorised entity - Sibu Kurnia Marine Sdn Bhd (SKM) for a consideration of $1,375k. With this transaction, IOU can now provide Buy Now Pay Later (BNPL) service offerings to merchants and consumers in Malaysia.

Outlook: The company foresees an opportunity due to vast underbanked South East Asian population, prevailing COVID-19 restrictions, and regional trends of online purchase and payment volumes and values set to prevail. Given these demand drivers, a clear roadmap and increased commercial pipeline, the company is well-placed to grow its mobile banking and online payments business with more funds, better positioning, and new product development avenues.

Stock Recommendation: The stock of IOU gave a negative return of 15.38% in the past three months and a positive return of 312.50% in the past six months. The stock is currently trading slightly higher than its 52-weeks’ average price level of $0.004-$0.28. The stock of IOU has a support level of ~$0.152 and a resistance level of ~$0.177.  On TTM basis, the stock is trading at EV/Sales multiple of ~11.5x as compared to industry (Software & IT Services) median of ~8.6x and is thus overvalued. Considering the trading levels, fall in top line & loss in FY20, impact of COVID-19 and falling sales in Malaysia and Indonesia in 1H19, and TTM valuation, we give an ‘Avoid’ rating on the stock at the current market price of $0.165, up by 6.451% on 29^th January 2021.

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

Crowd Media Holdings

CM8 Details

Quick Look at Q2FY21 Activities: Crowd Media Holdings Limited (ASX: CM8) is a provider of information, content, entertainment and utility services for mobile handsets/smartphones and tablets. As on 29^th January 2021, the market capitalisation of the company stands at ~$24.99 million.

During Q2FY21, CM8 signed a 50-50 Joint Venture with VFR Assets and Holdings Ltd. (VFR), an Israeli-based company to co-develop a technological platform to scale up ‘Talking Head’ digital assets for use in conversational commerce. During the quarter, CM8 restructured its Crowd Direct business with focus on Kamu and KINN – its best performing brands with the most potential. Its mobile division (Subscription and Q&A) has continued to generate profits despite regulatory, and sectoral headwinds & no growth potential communicated to the investors.

December 2020 Financial Results: The company recorded an increase of 20% QoQ in sales revenue to $379k and improved cash receipts from the customers to $4 million, up by 15% on QoQ basis. During the quarter, the company paid off $1.67 million senior secured debt facility from BillFont Limited during December 2020 quarter. The company received $1.1 million through options executed during the quarter. The company had cash at bank of $2.9 million at the end of December 2020 and $5 million post placement of capital towards end of January 2021.

Cash Flows from Operating Activities, December 2020 Quarter (Source: Company Reports)

Inked Key Contract Post Q2FY21: On 27^th January 2021, the company announced entering an agreement with AFLR to build an integrated core AI engine and voice-cloning engine to lead the Talking Head platform.

Outlook: The company plans to build and market a technical platform based on Crowd’s Q&A chatbot prior to the close of FY22 and ahead of its internal timelines.

Stock Recommendation: The stock of CM8 gave a negative return of 22.64% in the past one months and a positive return of 70.83% in the past six months. The stock is currently inclined towards its 52-weeks’ low level of $0.01. The stock of CM8 has a support level of ~$0.034 and a resistance level of ~$0.058. Considering the declining top line from FY18-FY20, net loss from FY17-FY20, low market capitalisation, negative ROE, and TTM valuation, we give an ‘Avoid’ rating on the stock at the current market price of $0.041, down by 10.870% on 29^th January 2021.

CM8 Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

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