Stocks’ Details

hipages Group Holdings Ltd

Commenced Trading on ASX: hipages Group Holdings Ltd (ASX: HPG) operates an online platform that connects Australia with trusted tradies to simplify home improvement. The market capitalisation of the company stood at ~$273 million as on 18^th December 2020. On 12^th November 2020, the company commenced trading on the Australian Securities Exchange (ASX) after a successful initial public offering (IPO) of $100.4 million at $2.45 per share. The company would utilise the IPO proceeds to generate future growth via investment in its brand and technology platform and expansion into a new channel and adjacent opportunities.

For the year ended 30^th June 2020, the company reported revenue amounting to~$45.6 million as compared to~$41.1 million in FY19. Loss for the year amounted to $5.91 million against the loss of $14.1 million in FY19. For Q1FY21, the company reported total revenue of $13 million, up 17% on Q1 FY20. Further, the company reported a recurring revenue growth of 24% in Q1FY21.

Key Financials (Source: Company Reports)

Guidance: For FY21, the company anticipates total revenue of $53.9 million, reflecting a YoY growth of 15%, and expects to achieve recurring revenue growth of 20%.

Stock Recommendation: As on 30^th June 2020, the cash and cash equivalents of the company stood at $8.8 million as compared to $5.2 million as on 30^th June 2019. The stock of HPG has corrected 13.41% in the last one month. On a TTM basis, HPG has an EV/sales multiple of 6.3x as compared to the industry median (Software & IT Services) of 7.4x. On a technical analysis front, the stock has a support level of ~$2.08 and a resistance level of ~$2.29. Therefore, considering the decent growth in revenue, improvement in bottom-line, modest outlook and key risks associated with the business, we give a “Speculative Buy” recommendation on the stock at the current market price of $2.130 per share, up by 1.428% on 18^th December 2020.

DigitalX Limited

Decent Growth in Liquid Assets: DigitalX Limited (ASX: DCC) is a blockchain-based software solutions company specialised in blockchain application development and digital asset management services. The market capitalisation of the company stood at ~$60.06 million as on 18^th December 2020. Recently, the company has rolled out the first RegTech application “Drawbridge”, which helps in decreasing corporate governance and insider trading risks by digitising compliance for ASX and globally listed companies. During the quarter ended 30^th September 2020, the company reported an operating cash outflow of $339k with receipts of $220k. As a result of stronger digital asset prices against the previous quarter, the company witnessed a rise of 8.56% in liquid assets to $0.9 million.

Cash Flow (Source: Company Reports)

Outlook: The company is optimistic about its future business outlook on the back of a strong digital asset market and numerous new commercial opportunities.

Stock Recommendation: As on 30^th September 2020, the cash and cash equivalents of the company stood at $4.05 million. Current ratio of the company stood at 17.44x in FY20 as compared to the industry median of 1.96x. This indicates that the company is in a decent position to settle its short-term obligations against the broader industry.  In the past three months, the stock has provided a stellar return of 121.95%. The 52-week low-high range for the stock stands at $0.012 - $0.135, respectively. On a technical analysis front, the stock has a support level of ~$0.0345 and a resistance level of ~$0.1348. Thus, considering the recent launch of the first RegTech application, growth in liquid assets and positive outlook, we give a “Hold” recommendation on the stock at the current market price of $0.091 per share, down by 6.186% on 18^th December 2020.

Global Energy Ventures Limited

A Look at Q1 FY21: Global Energy Ventures Limited (ASX: GEV) is an independent oilfield services company that provides an extensive range of specialist services including fabrication, NDT OCTG and lifting inspections, asset integrity manpower supply, pressure testing, etc. The market capitalisation of the company stood at ~$30.18 million as on 18^th December 2020. Recently, the company stated that GEV and Capilano Maritime Design have finished the new compressed hydrogen ship (C-H2 Ship) Specification and General Arrangement drawings for the 2,000-tonne capacity compressed hydrogen ship. In addition, the company has filed a US provisional patent application for the apparatus for the marine storage and transport of hydrogen. During September 2020 quarter, the cash expenditure of the company was in line with guidance with total operational cash outflows of $588,000.  For the year ended 30^th June 2020, the company recorded a loss amounting to $2,881,583 as compared to $8,883,857 in FY19.

Cash Flows (Source: Company Reports)

Outlook: Looking forward, the company would continue to work on the commercialisation of CNG Optimum with a primary focus on the announced projects located in Brazil and the United States.

Stock Recommendation: As on 30^th September 2020, the cash and cash equivalents of the company stood at $2.5 million as compared to $3.14 million as on 30^th June 2020. On a TTM basis, the stock of GEV has a price to book value multiple of 3.3x against the industry median (Oil & Gas) of 1.6x. On a technical analysis front, the stock has a support level of ~$0.049 and a resistance level of ~$0.13. Therefore, considering the company’s reduced cash balance, negative ROE, low market capitalization, negative bottom-line, and higher valuation, we advise investors to avoid the stock at the current market price of $0.075 per share, down by 3.847% on 18^th December 2020.

Comparative Price Chart (Source: Refinitiv, Thomson Reuters)

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