Hansen Technologies Limited

On Track to Deliver FY19 Guidance: Hansen Technologies Limited (ASX: HSN) is engaged in development, integration, and support of billing systems software.

Shareholding Update: The company recently updated that David John Osbome and Bruce Geoffrey Adams became a substantial shareholder of the company with the voting power of 17.8% and 17.7%, respectively, as at 09 August 2019.

Results Release Date: The company recently notified that financial results for FY19 will be released on 23 August 2019.

Strategic Acquisition withSigma Systems: In another announcement, the company notified that it has completed the acquisition of Sigma Systems for an enterprise value of A$166.2 million. The acquisition has expanded the company’s scale and scope in the telecommunications sector. Overall, the deal has further expanded the depth and breadth of the company’s global presence.

1HFY19 Highlights: During the first half, revenue amounted to $112.4 million, down 5.1% on the prior corresponding period revenue of $118.4 million. The decline in revenue was due to lower non-recurring revenues as a result of lower project work and lower one-off license fees. EBITDA for the period was reported at $28.5 million, as compared to $33.8 million in pcp. An interim fully franked dividend of 3.0 cents per share was paid on 29 March 2019.


Performance Highlights (Source: Company Reports)

FY19 Guidance: The company expects operating revenue in FY19 to be slightly lower than FY18, on account of lower level of non-recurring fees and services revenue. The company will terminate the underperforming call centre contract within the US Solutions business, which will lead to a loss of around $1.9 million of revenue in FY19. Expense base for the year is expected to remain consistent with FY18.

Stock Recommendation:The company’s stock generated returns of 12.24% over a period of 6 months. In 1HFY19, the company improved on its EBITDA margin in comparison with 2HFY18 due to lower employee expenses and reduced contractor, occupancy & travel costs. Due to higher than anticipated revenue in the first half, the company expects 2HFY19 revenue to be consistent with the first half. The recent acquisition of Sigma Systems and its subsequent integration into the business is expected to be earnings per share accretive in FY20. Currently, the stock is trading close to a 52-week high price of $4.290 with PE multiple of 31.48x. Given the backdrop of aforesaid factors and current trading levels, we give a “Hold” recommendation on the stock at the current market price of $3.970, up 3.385% on 19 August 2019, ahead of its full-year results which are to be released on 23 August 2019.
 

Infomedia Limited

Growth Across all Regions and Products:Infomedia Limited (ASX: IFM) is engaged in the development and supply of Software-as-a-Service & provision of data analytics.

Recent Updates: The company recently provided an update on the issue of fully paid ordinary shares to Jonathan Rubinsztein, CEO & MD. He received 3,750,000 shares following vesting and exercise of unquoted Performance Options with a strike price of 92.2 cents. 706,671 fully paid ordinary shares were issued with a nil exercise price. In addition, the company also updated regarding the change in remuneration package for Jonathan Rubinsztein.

FY19 Financial Highlights: Revenue for the year was reported at $84.60 million, up 16% in comparison to FY18 revenue of $72.94 million. The company reported EBITDA amounting to $38.04 million, up 31% in comparison to the previous year EBITDA of $29.05 million. Net profit after tax was reported at $16.12 million, up 25% on FY18 NPAT of $12.9 million.


Key Financials (Source: Company Reports)

Outlook: The company has started FY20 with strong, global customer relationships and good momentum. Moving forward, the company expects revenue and earnings for FY20 to deliver double-digit growth.

Stock Recommendation: The stock of the company generated returns of 55.74% over a period of 1 year and is currently trading close to its 52 weeks high level of $2.080, and therefore, probability for correction increases.In FY19, the company posted strong growth in revenue, EBITDA, and NPAT along with improved margins. The acquisition of Nidasu announced in 1HFY19, continued to deliver to expectations with strong revenue growth across all products. In addition, the company is also expecting to deliver double-digit growth in FY20 revenue and earnings. Considering the high returns in last one year and current trading levels, we put our watch view on the stock at the current market price of $1.835, down 3.421% on 19 August 2019 and suggest investors to wait for better entry level.
 

WiseTech Global Limited

Recent Acquisitions to Shape FY19 Results: WiseTech Global Limited (ASX: WTC) is engaged in providing software to the logistics services industry.

Acquisition Update: The company provided an update regarding the acquisition of Depot Systems, a container yard and terminal management logistics solutions company in US. The acquisition will help to build further opportunities for the company’s technology solutions. The transaction involved an upfront purchase cost of $4.4 million. Consolidation of Depot Systems into WiseTech Global’s accounts is expected to take place in October 2019. In April, the company acquired Xware, a Swedish messaging integration solutions provider. This helped the company to enhance its messaging gateway with greater control over future development.

Shareholding Update: As per another announcement, the voting power of The Capital Group Companies, Inc increased its interest in the company from 6.6056% to 7.6788%.

1HFY19 Performance: Revenue for the period amounted to $156.7 million, up 68% on pcp. Net profit for the period stood at $23.1 million, up 48% on the prior corresponding period profit of $15.6 million. EPS for the period stood at 7.6 cents, up 43% in comparison to pcp.


1HFY19 Financial Highlights (Source: Company Reports)

FY19 Guidance: Post acquisition of Containerchain, the company provided a revised revenue & EBITDA guidance in the range of $326 million - $339 million and $100 million - $105 million, respectively.

Stock Recommendation:The stock generated returns of 73.04% over a period of 1 year. The acquisition of Depot Systems is expected to provide synergies with the company’s container optimisation solutions business, Containerchain and will provide large scale addition to container yard customers in the US. The impact of the above acquisitions on FY19 performance is yet to be seen in the awaited FY19 results. Currently, the stock of WTC is trading closer to its 52-week high price of $33.48 with higher PE multiple of 164.81x. Hence, considering the aforesaid facts and current trading levels, we have a wait and watch stance on the stock at the current market price of $27.280 per share (up 2.172% on 19^th August 2019) and wait for better entry levels.

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