iSentia Group Ltd

ISD Details

Focusing on operating efficiencies: iSentia Group Ltd (ASX: ISD) has had a turbulent trading profile this year so far. The group had reported 1% decline in its FY17 revenue to $155.1 million. Group EBITDA also slipped 19% to $41.5 million and there was a 24% drop in underlying net profit after tax at $24.7 million. However, the group’s client retention has remained strong. The content marketing segment reported a substantial decline in revenue due to discontinuation of King Content brand. Revenue from Australia/New Zealand rose 1% to $107.9 million while the EBITDA decreased 6% to $46.6 million due to a $5.3 million increase in copyright fees. However, after adjusting for the reclassification of Two Social, an acquisition in Australia, the revenue increased 2.6% and EBITDA declined 4%. On the other hand, SaaS revenue growth of 1% was affected by increased competition related to the timing of copyright agreements and higher customer churn in H1. However, the competitive environment stabilized in H2 with the delivery of new products.


Result Summary (Source: Company Reports)

Asian revenue increased 16% to $32.9 million and EBITDA declined 5% to $6.6 million due to $0.5 million clean-up of bad debt and higher data costs in North Asia. Further, SaaS revenue growth of 3% was constrained by the delay in the rollout of Mediaportal into South Korea. Strong VAS growth of 30% benefited from higher client demand and the fully integrated acquisitions that benefitted from the upsell to Isentia’s client base. For FY18, ISD is focusing on further reduction in churn in ANZ through current product enhancements including the rollout of Stories and Mediaportal upgrades, while expanding SaaS into the Asia region through the launch of Mediaportal into all nine Asian countries. The stock has plunged over 53% in the past one year while it is down 11% in the past three months (as at September 14, 2017), owing to softness in financial results and FY17 profit down grade. However, given the expansion of SaaS into the Asia region coupled with the implementation of operating efficiencies, we give a “Hold” recommendation on the stock at the current price of $ 1.71

Primary Opinion Ltd

POP Details

Impairment of goodwill dragged the performance: Primary Opinion Ltd (ASX: POP) (which has reinvented itself multiple times into diverse sectors with invested capital in technology sector, wireless entertainment, legal sector and food and beverage sector), reported for FY17 net loss of $10.3 million against the loss of $1.8 million in FY16 (a rise of 463%). The increased net loss is primarily due to accounting for the company’s share of losses of Maggie Beer Products Pty Ltd (MBP), amounting to $1.0 million and impairment of its investment of $8.5 million during the period. On the other hand, the net assets of the consolidated entity increased by $7.9 million to $9.4 million due to capital raising which was completed with raising a total of $20.0 million before share issue costs followed by a 48% equity investment in MBP for $15.0 million. Accordingly, an impairment amounting to $8.5 million has been recognised as at 30 June 2017.

The stock has surged 88.6% in the past six months while it is up 153.8% in the past three months (as at September 14, 2017), led by the transformation from a social media to food company by acquiring a 48% stake in Maggie Beer Products. Further, Bellamy’s Australia Ltd.’s ex-CEO, Laura McBain, joined POP under the role of managing director and a substantial shareholder. The stock has been up 3% on September 15, 2017. Given the sharp upsurge in the stock price while company’s efforts are yet to yield positive results, we believe that the stock is “Expensive” at the current market price of $ 0.03

Syntonic Ltd

SYT Details

Launch of the iOS version of Freeway Overpass: Syntonic Ltd (ASX: SYT) has recently gained a lot of traction with its strong FY17 results that depicted 17% revenue growth from sales and service. The company had released its Freeway Overpass, the first cross-carrier paid and sponsored subscription service, during the year. On September 15, 2017, the shares of Syntonic rocketed higher by 19.2% as the company announced about the launch of its iOS version of Freeway Overpass on the Apple App Store. The launch complements the Android version deployment on the Google Play store and helps to drive U.S. consumer awareness and adoption. According to a recent survey by MATRIXX Software, nearly 60% of all mobile users, including those currently on unlimited plans, would change their mobile service if they had more choice and control over the use of their data plan. Additionally, nearly half of survey respondents indicated they would be willing to pay 10% more for unlimited access for only the apps they use most often.

Notably, Freeway Overpass is the first cross-carrier, over-the-top (OTT), paid and sponsored, subscription service that offers unlimited mobile access for the most popular mobile content and applications, providing relief to mobile subscribers who grapple with the sticker shock of exceeding data plan limits or paying more for a higher-tiered plan. The Overpass service saves consumers’ money by giving them the flexibility to choose unlimited access for the specific apps and content they want and need. Moreover, subscription plans are offered as sponsored and paid, with the latter starting at US$0.99 per day. Importantly, Overpass started generating early revenue from day one of launch, validating the U.S. market opportunity. Syntonic expects revenue from this channel to build over the coming quarters. The marketing activities for Freeway Overpass have also begun in the U.S. through direct paid acquisition, demographic targeting, and social media programming. Freeway Overpass was recently featured in Variety, a highly respected online entertainment magazine with 17 million unique monthly visitors.

Given the ongoing developments and a positive outlook, we give a “Speculative Buy” recommendation on the stock at the current market price of $ 0.031

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 advice or recommendations.