Stocks’ Details

Visioneering Technologies, Inc.

Financial Highlights of Q3 FY20: Visioneering Technologies, Inc. (ASX: VTI) is engaged in the designing, sale, and distribution of NaturalVue^TM contact lenses. The market capitalisation of the company stood at $34.09 Mn as on 28^th October 2020. Despite the challenges created by COVID-19 pandemic as well as the subsequent downsizing of its field sales force in Q2 FY20, the company managed to achieve record positive results in the quarter ended 30^th September 2020 (Q3 FY20). VTI recorded net revenue for the period of US$1.6 million, reflecting a rise of 139% as compared to Q2 FY20. In addition, shipments to US ECPs (Eye Care Professionals) witnessed a rise of 79% against Q2 FY20 to a record US$1.7 million. However, shipments to US ECPs experienced lesser growth as compared to net revenue because of the timing of inventory purchases as compared to shipments at the distributor level.

During the September 2020 quarter, active US accounts mounted up by 21% to a record of 2,173 accounts as compared to Q2 FY20. Gross profit for the quarter proved as a record high, which reflects 46.1% of net revenue for Q3 FY20 against 40.8% of net revenue for Q2 FY20. However, the gross profit for Q2 FY20 impacted by high shipping costs as the incidence of direct-to-patient shipping in the US grew dramatically during the Q2 FY20.

Key Financials (Source: Company Reports)

Outlook: Going forward, the company continues to achieve grip in international territories and likely to report a strong 2020 and continued growth in 2021.

Stock Recommendation: For the first time in its history, the company achieved positive cash flow during Q3 FY20 (Excluding cash expended on inventory purchases). As compared to Q2 FY20, the cash receipts from customers moved up by 74% to a record US$1.9m in Q3 FY20. The company closed the quarter with cash and cash equivalents of US$3.8 million. In the past three and six months, the stock has moved up by 100% and 112.50%, respectively. In addition, the stock is trading at a price to book value multiple of 24.4x as compared to the industry median (Healthcare Equipment & Supplies) of 3.3x on TTM basis. On the technical analysis front, the stock price of VTI has an immediate support level of ~$0.029 and a resistance level of ~$0.107. Therefore, considering the upside movement in stock in the past few months and higher valuation, we give an “Expensive” recommendation on the stock at the current market price of A$0.033 per share, down by 5.715% on 28^th October 2020. We further suggest investors to wait for better entry levels.

Smart Parking Limited

Decent Growth in Q1 FY21: Smart Parking Limited (ASX: SPZ) is primarily engaged in the parking management, with a market capitalisation of ~$39.51 Mn as on 28^th October 2020. In a recent Q1 FY21 business update, the company stated that the initiatives, which were executed in FY20 to streamline & cement the business have commenced delivering positive returns. Restructuring of the UK sales team has resulted in addition of 56 new sites in Q1 FY21 along with the commitment of 40 new sites in Q2 FY21. In addition, NZ Services business has been developed with 2 sites, which are currently in the process of installation.

Key Metrics (Source: Company Reports)

FY20 Financial Highlights: For the year ended 30^th June 2020, the company reported revenue amounting to $21.6 million as compared to $27.2 million with the net statutory loss after tax of $7.3 million. These results were impacted by COVID-19 pandemic. With respect to parking management division, the company secured and installed an additional 141 new ANPR (Automatic Number Plate Recognition) sites for a mix of current and new customers, which resulted in a rise of 28% in sites during FY20.

Outlook:  Going forward, the company is optimistic about various market opportunities in all Smart Parking territories in spite of global challenges and uncertainties. For Q2FY20, the company would maintain its focus on expanding the NZ Managed Services offering with more sites in the pipeline. The company has scheduled to conduct its 2020 Annual General Meeting on 20^th November 2020.

Stock Recommendation: As on 30^th September 2020, the cash balance of the company stood at $9.3 million. The 52-week low-high range for the stock stands at $0.070 - $0.260, respectively. In the past one and three months, the stock has provided returns of 19.04% and 34.40%, respectively. SPZ has an EV/Sales multiple of 2.0x as compared to the industry median of 17.9x on TTM basis. On the technical analysis front, the stock price of SPZ has an immediate support level of ~$0.085 and a resistance level of ~$0.152. Therefore, considering the decent performance in Q1 FY21, the addition of new sites in the UK division, future focus and key risks, we give a “Speculative Buy” recommendation on the stock at the current market price of $0.125 per share, up by 13.636% on 28^th October 2020, owing to the release of Q1 FY21 business update.

Webcentral Group Limited

Acquisition by 5GN Network Limited: Webcentral Group Limited (ASX: WCG) mainly offers cloud-based technology services that helps organisations of all sizes to successfully do business online. The market capitalisation of the company stood at ~$19.54 million as on 28^th October 2020. On 17^th September 2020, the company received a takeover bid offer from 5G Networks Limited, wherein 5GN would acquire 100% of the WCG shares on issue. 5GN offered 1 fully paid ordinary share in 5GN for every 12 WCG shares held by a WCG shareholder as a consideration.  The offer price reflected a premium of 45% to the 3-month VWAP price of $0.11 per WCG share. It was also mentioned that 5GN currently possesses a relevant interest of around 10.07% in WCG. On 28^th October 2020, 5GN advised the market that it has increased its relevant interest and voting power in WCG to 50.69%. In addition, the offer has been extended for 2 weeks to 10 November 2020. As per Joe Demase, Managing Director of 5GN, the acquisition would supplement the current infrastructure by using its available capacity and resultantly, it would generate increased EBITDA in the group.

1HFY20 Key Financial Highlights: For the half-year ended 30^th June 2020, the company reported revenue from ordinary activities and continuing operations of around $21.6 million as compared to $46.6 million in 1H FY19. Loss after tax from continuing operations stood at around $17.9 million against $1.6 million in 1H FY19.

Financial Summary (Source: Company Reports)

Outlook: Going forward, the company is expecting sustained closures or a decline in business activity of the Group’s customers as a result of the uncertainties caused by COVID-19, In addition, this may impact its financial performance.

Stock Recommendation: As on 30^th June 2020, the cash and cash equivalents of the company stood at ~$3.4 million against ~$8.1 million as on 30^th June 2019. The 52-week low-high range for the stock stands at $0.063 - $0.465, respectively. The stock of WCG has moved up by 55% and 40.90% in the last three and six months, respectively. On the technical analysis front, the stock price of WCG has an immediate support level of ~$0.078 and a resistance level of ~$0.408. Therefore, considering the acquisition by 5GN Networks, low market capitalisation, loss-making business and movement in the stock in the past months, we suggest investors to avoid the stock at the current market price of $0.155 per share, down by 3.126% on 28^th October 2020.

Comparative Price Chart (Source: Refinitiv, Thomson Reuters)

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