Digitalx Limited

DCC Details

Business Update: Digitalx Limited (ASX: DCC) is a technology and investment company that is focused on blockchain consulting and digital asset funds management. The market capitalisation of the company as on 13 April 2021 stood at ~$47.88 million. As per a recent update, the company has reported DigitalX Bitcoin and digital asset holdings at $35.2 million at the end of March 2021. The total funds under management stood at $31.9 million during the same period end.

Change of Director’s Interest Notice: The company’s director Peter Irwin Rubinstein has acquired 3,000,000 fully paid ordinary shares during 26-31 March 2021, for a total consideration of $191,993.66.

H1FY21 Performance Update: The company has reported a revenue of $281,785 during the period. Net loss narrowed down to $1.01 million in H1FY21, compared to a loss of $6.54 million in the previous corresponding period. It had a cash position of $3.82 million as of 31 December 2020.

H1FY21 Financial Performance (Source: Company Reports)

Outlook: DCC has announced the successful completion of $8.8 million capital raising from US Institutional Investors on 9 March 2021. It plans to use the proceeds to accelerate its business plan by growing the funds management division along with continued development and rollout of its Drawbridge RegTech product.

Key Risks: The Group’s activities expose it to a variety of risks such as credit risk and digital asset price risk, to name a few. It also operates in the niche space of cryptocurrency and is subject to prudent regulations and rules.

Stock Recommendation: As per a recent update on 12 March 2021, the company has announced the commercialisation and growth plan for its RegTech application Drawbridge, which provides digital governance for publicly listed companies. As per ASX, the stock of DCC is trading below its average 52-weeks’ levels of $0.017-$0.135. The stock of DCC gave a positive return of ~69.23% in the past six months and a positive return of ~6.45% in the past one week. On a technical analysis front, the stock of DCC has a support level of ~$0.047 and a resistance level of ~$0.103. On a TTM basis, the stock of DCC is trading at a P/BV multiple of 2.1x, lower than the industry average (Technology) of 9.9x. Considering the current trading levels and the valuation on TTM basis, narrowing of losses, key risks associated with the business and on the back of successful funding from Institutional Investors, we recommend a ‘Speculative Buy’ rating on the stock at the current market price of $0.066, up by ~1.538% as on April 13, 2021.

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

Isentia Group Limited

ISD Details

H1FY21 Results Update: Isentia Group Limited (ASX: ISD) is engaged in the provision of media intelligence services to clients. The market capitalisation of the company as on 13 April 2021, stood at ~$19.61 million. The company has reported a revenue of $41.8 million during the first half of FY21, impacted by a cyber incident in the December quarter and COVID-19 pandemic. However, this was offset by an increase in efficiency, reflecting 8.9% reduction in total costs, which resulted in the delivery of underlying EBITDA of $5.9 million. Despite a challenging first half, the company's fundamentals remain in good shape and the management is positive about its prospects. The company has completed a new 3-year debt facility of $46.6 million during the first half of the year. The net debt stood at $30.3 million as of 31 December 2020.

H1FY21 Financial Performance (Source: Company Reports)

Other Recent Update: As per a recent news, the company has announced the retirement of Independent Non-Executive Director Travyn Rhall, effective from 29 March 2021. Following, this he has ceased to be a director of the company.

Outlook: The company has diverted its resources, which in turn will strengthen its cybersecurity position. It has also continued with its strategic transformation programs and delivered new product features to its customers, which remains key catalysts, going forward. Despite the delay in projects due to the cybersecurity incident, the company expects them to be delivered in Q4FY21 and Q1FY22.

Key Risks: The company operates in a sector where it is very much prone to cybersecurity breaches and threats. As such it has to invest in its technology and look to upgrade to mitigate the associated risks.

Stock Recommendation: As per ASX, the stock of ISD is trading below its average 52-weeks’ levels of $0.094-$0.250. The stock of ISD gave a positive return of ~1.04% in the past one month and a negative return of ~39.37% in the past three months. On a technical analysis front, the stock of ISD has a support level of ~$0.094 and a resistance level of ~$0.169. On a TTM basis, the stock of ISD is trading at an EV/Sales multiple of 0.6x, lower than the industry median (Technology) of 5.9x Considering the expected upside in valuation on TTM basis, current trading levels, resilient performance despite the cybersecurity incident, increase in efficiency in operations and the key risks associated with the business, we recommend a ‘Speculative Buy’ rating on the stock at the current market price of $0.097 as on April 13, 2021.

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

Note: 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.

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