Japara Healthcare Limited

JHC Details

Decent Growth in Topline: Japara Healthcare Limited (ASX: JHC) owns, operates, and develops residential aged care homes. The market capitalisation of the company stood at $104.22 Mn as on 16^th October 2020. Recently, the company notified that it has vested 327,974 performance rights, which were granted to its executives in October 2019 under the company’s Equity Incentive Plan. In addition, the company has also forfeited and cancelled further 24,510 performance rights granted in October 2019 in accordance with their terms of the grant. For the year ended 30^th June 2020, the company reported total revenue amounting to $427.5 million, reflecting a rise of 6.9% against FY19. This was primarily supported by additional development earnings and increased revenue per resident.

EBITDA and statutory net loss after tax for the amounted to $32.9 million and $292.1 million (Includes a non-cash impairment charge of $291.9 million), respectively. During FY20, the company maintained its focus on resident and staff wellbeing and long-term growth for shareholders in spite of immense challenges by the sector and the company.

Key Metrics (Source: Company Reports)

Outlook: Looking forward, the company is expecting a contribution to earnings from the recent business developments. In addition, JHC anticipates interest and depreciation expenses to increase in FY21.

Valuation Methodology: Price to Cash Flow Multiple Based Relative Valuation (Illustrative)

Price to Cash Flow Multiple Based Valuation (Source: Refinitiv, Thomson Reuters)

Note: All forecasted figures and peers have been taken from Thomson Reuters, NTM-Next Twelve Months

Stock Recommendation: The company closed FY20 with decent balance sheet comprising net bank debt of $190.7 million and liquidity of $154 million. The stock of JHC is inclined towards its 52-week low levels of $0.345, offering decent opportunities for accumulation. On the technical analysis front, the stock price of JHC has a support level of ~$0.341 and a resistance level of ~$0.490. We have valued the stock using the P/CF multiple based illustrative relative valuation method and arrived at a target price with an upside of low double-digit (in percentage terms). Thus, in light of the decent growth in topline, decent balance sheet, current trading levels, and key risks associated with the business, we give a “Speculative Buy” recommendation on the stock at the current market price of $0.395 per share, up by 1.282% on 16^th October 2020.

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

Amaero International Ltd

3DA Details

Launch of New Machines: Amaero International Ltd (ASX: 3DA) is engaged in the provisioning of end to end additive manufacturing solutions in terms of services, equipment and technology to its key clients in the Aviation Defence and Space sectors and the Tool and Die industry. The market capitalisation of the company stood at ~$132.02 Mn as on 16^th October 2020. Recently, the company announced that it has rolled out new machines, which include SP260, SP400 and additional powder handling ancillary equipment. The launch of new machines enhances the company’s machine offering.  3DA works as a development partner and possesses exclusive distribution rights for SP machines in North America.

Signing of Agreements for Business Growth: During FY20, the company inked agreements with leading global manufacturers to develop 3D printing solutions, which possesses the potential to lead to commercial contract wins during FY21. In the month of May 2020, 3DA reached six months agreement with Fletcher Insulation Pty Ltd for the development of an additive manufacturing application. In addition, the company entered an agreement with a major global automotive manufacturer for collaboration on and development of additive manufactured (AM) tooling for the steel inserts, for two aluminum casting die components. During FY20, the company reported revenue from contracts with customers amounting to $116,584. The loss for the year amounted to $5,777,946 as compared to $82,341 in FY19. The company invested capital in FY20 for the establishment of its Australian and United States facilities.

Key Financials (Source: Company Reports)

Future Opportunities: The company seems to be well-placed to capitalise on manufacturing opportunities in the aviation, space and defence industries on the back of its established international facilities.

Stock Recommendation: As on 30^th June 2020, the cash and cash equivalents of the company stood at over $4 million as compared to $169k as on 30^th June 2019. 3DA decreased its operating cash expenditure for the June 2020 quarter by around 30% in order to preserve capital. The stock of 3DA is trading at a price to book value multiple of 8.0x as compared to the industry average (Machinery, Tools, Heavy Vehicles, Trains & Ships) of 3.9x on TTM basis. In the past three and six months, the stock has moved up by 362.50% and 410.34%, respectively. On the technical analysis front, the stock price of 3DA has a support level of ~$0.679 and a resistance level of ~$0.785. Hence, considering the steep upside movement in the stock within the past months and higher valuations on TTM basis, we give an “Expensive” recommendation on the stock at the current market price of $0.740 per share, down by 1.334% on 16th October 2020.

3DA Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

Pointerra Limited

3DP Details

ACV Growth Supported by US Energy and Utilities Sectors: Pointerra Limited (ASX: 3DP) provides a cloud-based digital asset management platform for 3D data. The market capitalisation of the company stood at ~$301.82 Mn as on 16^th October 2020. During September 2020 quarter (Q1 FY21), the company reported a growth of 72% in Annual Contract Value (ACV) to US$4.93 million, which was driven by growth in the expenditure by existing customers and new customers in the US energy utilities and mapping sectors. In addition, the company reported monthly ACV growth of 24% to US$0.95 million as compared to US$3.98 million reported on 1^st September 2020.  During Q1 FY21, the company recorded cash receipts from customers of $0.61 million against $0.82 million in Q4 FY20.

During FY20, 3DP continued to report growth in sales in all key customer sectors. The company reported revenue amounting to $1,228,165 as compared to $443,504 in FY19. The loss for the year after income tax amounted to $2,525,453 against $1,907,036 in FY19.

ACV Growth (Source: Company Reports)

Outlook: Going forward, Pointerra Limited would continue to commercialise its technology through its DPaaS (Data Processing as a Service), DaaS (Data as a Service) and AaaS (Analytics as a Service) recurring subscription-based revenue model. The company is optimistic about the upcoming opportunities in US Defence Sector, wherein, it has recognized and is negotiating potential consulting arrangements with several recently retired ranking officers.

Stock Recommendation: As on 30^th June 2020, the cash balance of the company stood at $2,336,873 against $947,336 as on 30^th June 2019. The 52-week low and high range for the stock stands at $0.015 - $0.675, respectively. In addition, the stock price of 3DP has moved up by ~232% and ~992.10% in the last three and six months, respectively. We presume that at the current level, the price has discounted most of the positives. In the near term, there could be some price correction in the stock. Therefore, in light of the current trading levels and past movement in the stock, we suggest our investors to wait for a better entry levels and recommend an ‘Expensive’ rating on the stock at the current market price of $0.415 per share, down 7.778% on 16^th October 2020. 

3DP Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

Disclaimer  

The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkine.com.au and associated pages are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation. Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product. The link to our Terms & Conditions has been provided please go through them and also have a read of the Financial Services Guide. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine Pty Ltd do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as personalised advice.