Myfiziq Limited

MYQ Details

Conversion of Options and Performance Rights to Shares: Myfiziq Limited (ASX: MYQ) is a developer of mobile phone technology that allows users to assess their physical dimensions via a smartphone into a 3D image. The company caters to wellness, online apparel, insurance life, telemedicine, and health & fitness segments by offering Software as a Service (SaaS) through a B2B model. As on 21^st December 2020, the market capitalization of the company stood at ~$142.42 million. In a notice to ASX on 18^th December 2020, the company notified the issue of 2.34 million fully paid ordinary shares out of which 1 million shares were issued to 2 Non-Exec Directors for a contract of services and 0.347 million shares issued to suppliers for no consideration for the services rendered for improving MYQ’s cash flow. Through another trading, MYQ notified the issue of 5.69 million shares for converting 2 million options and 3.750 million performance rights and made them a part of the present capital structure.

Q1FY21 Result Highlights & Trading Update: The company reported cash receipts from customers amounting to $659k, a 1,634% increase in Q1FY21 versus Q1FY20. The net cash used in operating activities dropped by 73% from $1,145k in Q1FY20 to $310k in Q1FY21. Post September 2020, MYQ entered a contract with Nexus-Vita for a guaranteed revenue of at-least USD 3.58 million per year from the date of launch. The company has strengthened its financial position with a $5 million placement with Evolution Capital Partners and receipt of $784k as a tax incentive claim for R&D in October. In the same month, the company roped in Ladenburg Thalmann & Co. Inc. as the lead underwriter for the proposed NASDAQ IPO.

Cash Receipts and Cash Payments Trendline (Source: Company Reports)

Enters Agreement to Merge Triage’s AI with CompleteScan SaaS Offering: The company has signed a binding term sheet to pick up a strategic equity stake in Triage Technologies, Inc to enable business growth and use of Triage’s AI health assistant license. MYQ will invest up to $6 million into Triage, including US$3 million in cash and $3 million via its ordinary shares as per the agreement. MYQ foresees to generate license and other fees from the contract in the future.

Outlook: The company has planned the launch of 3 applications by the end of CY20. It has also planned to launch Nexus-Vita, JayEx Healthcare, Wellteq, Mayweather and Fitocracy applications in Q3FY21. MYQ expects NASDAQ listing to bring it closer to its US customers and partners and expand its base.

Stock Recommendation: The stock of MYQ gave a positive return of 22.92% in the past three months and a positive return of 384.61% in the past six months. The stock is trading close to its 52-week high of $1.495. The stock of MYQ has a support level of ~$1.124 and a resistance level of ~$1.403. On a TTM basis, the stock of MYQ is trading at an Enterprise Value to Sales multiple of 217.4x, higher than the industry median (Technology) of 6.2x, and thus seems overvalued. Considering the stock’s decent performance in the last six months, current trading levels, and TTM valuation, we are of the view that most of the positive factors are already discounted at current levels. Hence, we suggest investors to wait for better entry levels and give an ‘Expensive’ rating on the stock at the current market price of $1.260, up by 11.5% on 21^st December 2020.

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

Novatti Group Limited

NOV Details

Trading Update: Novatti Group Limited (ASX: NOV) is a digital banking and payments services provider using its billing, fintech, and business automation platforms. As on 21^st December 2020, the market capitalisation of the company stood at ~$55.65 million. In a recent update, the company confirmed that it has been witnessing growth in Card Issuing, Technology Services, Subscriber Billing, and China Payments business lines. During Q2FY21, NOV secured new clients in Visa card issuing and Emersion (its subscriber billing and payment platform). Emersion’s present recurring revenue run rate is 30% (approx.) more than it was in April 2020. Over the quarter, NOV also signed a new partnership with RippleNet to accelerate growth in South-East Asia and leverage from Ripple’s financial network.

Q1FY21 Result Highlights: NOV hit a record revenue of $3.56 million in Q1FY21, up by 16% on a QoQ basis and by 46% on a YoY basis. Earnings turned positive with the normalised EBITDA of $101k and realised annualised gross transaction value of more than $2.3 billion for the September quarter. The company generated robust revenue especially from the new businesses and revenue of $525k from the Emersion platform in the quarter. NOV raised capital of $10.2 million to accelerate its growth strategy, launched a digital payments accelerator in the extension of its visa issuing program, and divested from SendFX, a payments cross-border platform realising $900k as funds in the quarter.

Q1FY21 Highlights (Source: Company Reports)

Lapse of Unlisted Options: As on 9^th December 2020, NOV announced a lapse of 2.67 million unlisted options. The options were exercisable at $0.19 and slated to expire on 30 November 2022.

Outlook: Given the results of FY20, growth in demand for digital services, and its current platforms, NOV is optimistic about its 2021 position. It plans to launch the Emersion platform in the US in Q3FY21 aiming at sales via partnerships with Salesforce, Oracle, and ConnectWise partnerships.  

Stock Recommendation: The stock of NOV gave a positive return of 11.36% in the past three months and a negative return of 37.17% in the past six months. The stock is currently trading below the average 52-weeks’ price band, offering a decent opportunity for accumulation. The stock of NOV has a support level of ~$0.21 and a resistance level of ~$0.314. Considering the current trading levels, decent performance in Q1FY21, growth in clients and business lines, positive outlook of FY21, we give a ‘Speculative Buy’ rating on the stock at the current market price of $0.245 as on 21^st December 2020.

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

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