Simavita Ltd

 First major marketing agreement signed: Simavita Ltd (ASX: SVA) witnessed its stock price rise by 120% in three months as on August 27, 2018. The company has recently signed its first major marketing agreement with Drylock Technologies NV, which is a European based global diaper manufacturer.
 
The agreement targets the sale of adult and infant products incorporating Simavita’s AlertPLUS platform technology for targeted sales up to 4 major customers in North America and Europe. An aggregate projected annual product purchase from targeted customers is of circa €200m (AUD310m).
 
The agreement is signed for a duration of 12 month period, but is subject to customary early termination rights. The company considers this agreement to be important for an outstanding validation of the PIVOT strategy and an important commercial start to the tremendous opportunity. The company’s opportunity is to materially build the revenue pipeline by licensing the AlertPLUS platform technology, while maintaining a low-cost structure. SVA as per the agreement will be entitled to get a share of profits generated from sales. Such profits are expected to vary as per the size and nature of sale agreements ultimately entered into with end user customers.
 
Based on the foregoing, we believe it might be better to wait and watch for some additional catalysts for the stock to be back on track, while it trended up by 6% as at August 28, 2018 to $0.035.
 

Afterpay Touch Group Ltd

 Strong FY 18 financial performance but challenges cropping up: Afterpay Touch Group Ltd.’s (ASX: APT) stock tumbled 5.6% on August 28, 2018. The company has recently raised $117 million through an institutional placement, priced at $17.05 per share, which was at the top end of the Placement price range, and represents a 2.5% discount to the 5 day VWAP to close of trade on 22 August 2018.
 
The company has planned to raise approximately $20 million through a Share Purchase Plan which will follow the Placement. The company is raising funds to use it for the company’s international expansion strategy to the UK market and enable further deployment of APT’s global system. APT will use the proceeds raised to acquire 90% of the issued shares in ClearPay, which is a UK based payments company through which customers can purchase items up to £450 (~A$793) in value and make repayments in three interest-free monthly instalments. On the other hand, APT in FY18 delivered 390% rise in revenue to $142.3 million, 468% rise in underlying EBITDA to $33.8 million and 6% rise in reported loss to $9 million. Therefore, APT stock has already risen 174.42% in three months as on August 27, 2018. The stock was in trading halt until 27 August due to fund raising.
 
As of now, we wait and watch while there are multiple discussions on any potential acquisition of the group, expansion as well as rising competition in the US zone, managing acquisition of ClearPay, and concerns on ASIC investigation relating to product intervention in case of short-term credit scenario. Based on the foregoing, we give a “Hold” recommendation on the stock at the current price of $ 19.950 and have the stock under our radar for any key developments.

 
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