Stocks’ Details

Openpay Group Ltd

Continued Strong Growth Across All Leading Indicators: Openpay Group Ltd (ASX: OPY) is a provider of payments technology that offers a Buy Now, Pay Later product. As on 1 May 2020, the market capitalization of the company stood at $80.2 million. The company has recently reported results for the third quarter ended 31 March 2020, wherein it reported continued strong growth across all leading indicators. During the quarter, Active Merchants increased by 63% to 2,025 and active customers went up by 113% on the pcp to 250,381.

The company also reported solid TTV growth of 80% to $45.8 million while its revenue went up by 71% on the pcp to $5.3 million.

Quarterly Operational and Financial Highlights (Source: Company Reports)

Continued investment in Growth: The company has extended its platform capabilities to support its growth strategy and has made several investments in its growth capabilities. It maintained positive momentum in the third quarter and is responding swiftly to COVID-19. The company has access to $45.6 million of cash in hand and thus is well capitalized to fund continued growth. OPY is seeking FCA authorization (expected in FY21) to provide further diversity in its products.

Stock Recommendation: As per ASX, the stock of OPY gave a return of 71% in the past one month. The company retains strong capital position and is focusing on supporting merchants in specialized industries. On the TTM basis, the stock is trading at an EV/EBITDA multiple of 3x, lower than the industry median (Professional & Commercial services) of 6.3x. Considering the attractive returns in the past one month, strong capital position and continued investment in growth, we recommend a ‘Speculative Buy’ rating on the stock at the current market price of $1.020, up by 19.298% on 1 May 2020.

Impression Healthcare Limited

Quarterly Update: Impression Healthcare Limited (ASX: IHL) is engaged in the marketing and manufacturing of oral and dental health products. As on 1 May 2020, the market capitalization of the company stood at $35.15 million. The company has recently released its quarterly update for the period ended 31 March 2020 and stated that it has received the active pharmaceutical ingredients and formulated IHL-42X for the start of its clinical trial for the treatment of Obstructive Sleep Apnoea.

During the quarter, the company received $229k from customer sales with a further $109k from medicinal cannabis sales receivable. During 1H20, revenue of the company went down by 12% to $359k and raised $7.1 million in new capital.

1H20 Financial Highlights (Source: Company Reports)

What to Expect: The company is not expecting any delay in the commencement of the IHL-42X clinical trial due to COVID-19. The company is using locally manufactured products to fulfil its long-term, more cost-effective supply chain. The deployment and growth of the Incannex business was unplanned and has had a negative impact on the dental device business.

Stock Recommendation: As per ASX, the stock of IHL gave a negative return of 26.87% in the past three months but a positive return of 40% in the last one month. The stock is currently inclined towards its 52-weeks’ low level of $0.019. During 1H20, gross margin of the company stood at 40.8% and current ratio of the company was 14.07x. On the TTM basis, the stock is trading at a price to book value multiple of 6.7x, higher than the industry average (Healthcare) of 3.4x. Considering the volatility in returns, trading levels, uncertainty in outlook due to COVID-19 and decline in performance, we have a watch stance on the stock at the current market price of $0.051, up by 4.082% on 1 May 2020.

Respiri Limited

AsthmaCare Telehealth Service with Practice Innovators: Respiri Limited (ASX: RSH) is an e-Health SaaS company supporting respiratory health management. As on 1 May 2020, the market capitalization of the company stood at $40.46 million. The company is providing shareholders with an opportunity to join a virtual presentation by CEO to be held on 1 May & 4 May. The company has entered partnering discussions with Practice Innovators International Pte Ltd to integrate Respiri’s wheezo® eHealth Software into PII Australia’s proprietary telehealth platform GPNow. This development pathway will facilitate the asthma care beyond the clinic.

The company has recently released its results for the quarter ended 31 March 2020 wherein it made strong progress in financial discipline. During the quarter, the company’s operating cash burn went down by 45%, as compared to pcp.

Cash Flow Used in Operating Activities (Source: Company Reports)

Stock Recommendation: As per ASX, the stock of RSH gave a negative return of 18.82% in the past six months and a negative return of 20.69% in the past one month. It is also trading close to its 52-weeks’ low level of $0.057. During 1H20, the company witnessed a substantial improvement in EBITDA margin and net margin. On the TTM basis, the stock is trading at an EV/Sales multiple of $18.5x, higher than the industry median (healthcare) of 9.2x. Considering the volatility in returns, trading levels and reduction in cash outflows, we have a watch stance on the stock at the current market price of $0.070, up by 1.449% on 1 May 2020.

Comparative Price Chart ((Source: Refinitiv, Thomson Reuters)

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