Vmoto Limited

VMT Details

1HFY20 Key Highlights: Vmoto Limited (ASX: VMT) is primarily focused on manufacturing and distribution of electric powered two-wheeler vehicles. For the first half FY20 period ended on 30 June 2020, the company reported consolidated revenues of $26.2 million, up by 55% on a year over year. EBITDA for the period significantly increased 188% on a year over year basis and came in at $2.71 million. As at 30 June 2020, the company’s net profit after tax stood at $1.81 million, up 501% on a year over year basis. During the period, the company reported robust cash flow from operations, amounting to $2.94 million. As at 30 June 2020, the company’s net debt came in at $1.9 million, down from $1.6 million recorded at the end of 31 December 2019, aided by increased deposits from customers due to improved orders from customers for groups products. VMT ended 1HFY20 with a cash balance of $7.4 million, and a total asset of ~$31 million.

1HFY20 Results (Source: Company Reports)

Outlook: The company is well poised and financially strong to continue its growth trajectory by executing its strategy of selling its products into international markets. Furthermore, the company is expecting an increase in sales, as people will have limited access to public transport post covid-19 lockdown and there are number of government regulations which VMT can take advantage of.

Stock Recommendation: The stock of the company went down by 16.53% in the past one month and is currently trading close to its 52-week high level of $0.67. The company has a market capitalisation of ~$146.09 million, with a P/E multiple of 41.1x. On a technical analysis front, the stock has a support level of ~$0.514 and a resistance level of ~$0.592. On a TTM basis, the stock of VMT is trading at an EV/Sales multiple of 2.5x, higher than the industry median (Automobiles & Auto parts) of 2.00x. Considering the above-mentioned factors, negative returns in the last month, current trading levels and higher valuation on TTM basis, we suggest our investors to wait for a better entry levels and recommend an ‘Expensive’ rating on the stock at the current market price of $0.53 on 19 October 2020.

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

AVA Risk Group Limited

AVA Details

Issue of Cleansing Notice: AVA Risk Group Limited (ASX: AVA) is an Australia based company engaged in providing risk management services and technologies to military, industrial, commercial and government sector, with a market capitalisation of ~$147.21 million as on 21 October 2020. On 15 October 2020, the company stated that it has issued 3,000,000 fully paid ordinary shares and received $ 412,500 million in consideration for the shares. The company exercised this option to generate funds and utilise the same towards general working capital.

Q1 FY21 financial results:  AVA announced its first-quarter financial results, wherein the company posted sales revenues of $17 million, up 73% on y-o-y basis, owing to increase in the services division, which came in at $8.1 million, aided by removal of certain Covid-19 air freight restrictions. This in turn aided the company which to normalize the price of its product. Furthermore, the technology division revenues stood at $8.9 million in 1QFY21. In same time span, EBITDA increased substantially by 522% to $7.7 million. The company exited the period with cash balance of $11.6 million, reporting an improvement of 50% from 30 June 2020. Also, the company declared a special dividend of 0.01 cents per share, payable on 23 October 2020.

In FY20, the net profit from ordinary activities, increased by 205% to $4.942 million as compared to a net loss of $4.729 million in FY19.

FY20 Financial Results (Source: Company Reports)

Stock recommendation: The company is going to hold its annual general meeting on 29 October 2020.  As per ASX, the stock of AVA gave a return of 443.25% in the past six months and a return of 70.73% in the last one month. On a technical front, the stock of AVA has an immediate support level of ~0.551 and a resistance level of ~$0.619. On a TTM basis, the stock of AVA is trading at an EV/EBITDA multiple of 16.2x, higher than the industry median (communication & networking) of 6.6x, thus seems overvalued. Hence, considering the steep upside movement in the stock within the past months, and current trading levels, we are of the view that most of the positives have been discounted and, hence, we suggest our investors to wait for a better entry level and recommend an ‘Expensive’ rating on the stock at the current market price of ~$0.58, down by 5.692% on 21 October 2020.

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

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