LiveTiles Limited  

LVT Details

3QFY21 Activities Highlights: LiveTiles Limited (ASX: LVT) is engaged in the development and sale of digital workplace software and offers user experience-focused solutions to the enterprise, education, and small and midsized business (SMB) markets. LVT has recorded a robust $3mn of customer contract for 3 years with United Health Group. In addition, the company has registered a significant increase in its Annualised Recurring Revenue (ARR) to $66.6mn on a constant currency basis. The company’s ARR has grown by 21% on pcp and 7% YoY on reported currency basis. LVT has seen a strong cash receipts at $12.2mn, up by 12% on pcp. Moreover, the company has been awarded with ISO27001:2013 certification which is a globally recognized information security management certification. LVT has entered the NASDAQ listed ServiceNow global partner program for the diversification of enterprise sales pipeline strategy.

1HFY21 Financial Highlights: The company has reported an increase in revenue to $20.25mn in 1HFY21 against $17.92mn in 1HFY20. The company has posted a loss of $21.51mn in 1HFY21. Total liabilities increased to $51.75mn as on 31 December 2020 against $50.50mn as on 30 June 2020.

Revenue trend (Source: Analysis by Kalkine Group)

Key Risks: The company is exposed to changes in foreign exchange prices. In addition, the company is exposed to a risk of technological disruption and Covid-19 uncertainties. 

Outlook: The company expects a strong demand for Reach (mobile version of LVT’s desktop product) to grow due to an increase of 139% in the sales pipeline in 3QFY21. LVT continues to focus on cost management to invest in the growth of customer base. LVT has a robust pipeline of RFPs, 21 in motion at ~$15mn value for CY21. The company is positive on future revenue growth with its revived sales force and marketing campaign.   

Valuation Methodology: EV/Sales based Relative Valuation Method (Illustrative) 

Source: 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: The stock of LVT gave a return of ~-3.03% in the last one month and a return of ~-25.58% in the last three months. The current market capitalisation of LVT stands at ~$145.98mn as of 23 June 2021. The stock is currently trading below the average 52-weeks’ price level range of ~$0.155-~$0.305. We have valued the stock using the EV/Sales multiple-based illustrative relative valuation method and arrived at a target price with a low double-digit upside (in % terms). We believe that the company can trade at a slight discount as compared to its peer average, considering the company has incurred losses in 1HFY21 and significant litigation expenses in 1HFY21. For this purpose, we have taken peers Class Ltd (ASX: CL1), Over the Wire Holdings Ltd (ASX: OTW), rhipe Ltd (ASX: RHP) to name a few. Considering the company has registered an increase in ARR, increase in revenue in 1HFY21, robust sales pipeline for Reach, addition to the Nasdaq listed global program, current trading levels, and valuation on TTM basis, we recommend a “Speculative Buy” rating on the stock at the current market price of $0.16, as on Jun 23, 2021.

LVT Daily Technical Chart, Data Source: REFINITIV 

Smart Parking Limited  

SPZ Details

2HFY21 Business Update: Smart Parking Limited (ASX: SPZ) is engaged in the design, development, and management of parking technology. Its SmartApp is a mobile application, which enables drivers to locate vacant parking spaces. SPZ has reported an increase in sites to 612 as on 31 May 2021, up by 23% compared with 30 June 2020. The company is likely to benefit with an increased parking breach notices to 29% YoY in 2HFY21. The company has received $2.8mn of VAT cash refund in 2HFY21 and spent $1.0mn towards share buyback till 31 May 2021. SPZ has reported NZ parking services business performing ahead of their expectations with 6 sites installed. 

Increase in Substantial Holder’s Interest:  SPZ has informed regarding a change in substantial holder’s interest in the company. Microequities Asset Management Pty Ltd has increase its holding from 7.55% to 10.41% in the company on 18 June 2021.

1HFY21 Financial Highlights: SPZ has registered a decline in revenue to $10.18mn in 1HFY21 against $14.03mn in 1HFY20 on the back of lockdowns due to COVID-19 situation. The company has posted profits in 1HFY21 to $4.5mn on the back of lower operating costs.

Revenue trend (Source: Analysis by Kalkine Group)

Key Risks: The company is exposed to Covid-19 uncertainties. In addition, the company is exposed to obsolete technology risks, which may impact the business severely. 

Outlook: SPZ is focusing on increasing the number of parking sites with 6 sites under management and to achieve a total of 75 sites by June 2023. The company intends to leverage new technology products into new and existing customers. The company is looking forward for strategic acquisitions in FY22. 

Stock Recommendation: The stock of SPZ gave a return of ~14.28% in the last one month and a return of ~17.64% in the last three months. The current market capitalisation of SPZ stands at ~$68.17mn as of 23 June 2021. On the technical analysis front, the stock has a support level of ~$0.18 and a resistance of ~$0.22. The stock is currently trading above the average 52-weeks’ price level range of ~$0.084-~$0.195. On a TTM basis, the stock of SPZ is trading at a P/BV multiple of 3.9x higher than the industry (Transport Infrastructure) average of 3.6x, thus seems over-valued. Considering the company has registered a decline in revenue in 1HFY21, decline in cash balance as on 31 May 2021, completion of drilling for ongoing projects in 3QFY21, decent stock price movement in past few months, current trading levels, and valuation on TTM basis, we suggest investors to book profits and recommend a “Sell” rating on the stock at the current market price of $0.20, up by 5.263% as on 23 June 2021.

SPZ 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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