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Stocks’ Details

Centrepoint Alliance Limited

New Business Model Complementing Industry Patterns:Centrepoint Alliance Limited (ASX: CAF) provides a range of financial advice and licensee support services, including licensing, systems, compliance, training and technical advice. The company also provides investment solutions and lending mortgage aggregation services to its customers.

Appointment of Director: In a recent announcement, the company notified that Alexander (Sandy) Beard has been appointed as an Independent Non-Executive Director on the Board, with effect from 1 January 2020.

Financial Performance: The year ended 30 June 2019 was a turnaround for the company, with profit before tax amounting to $1.2 million as compared to a loss of $3.4 million in the prior corresponding year. The above result came in after a significant reduction in legacy claims as compared to the previous year.

Some of the positives during the period included the launch of the new pricing model, business transformation that will provide good momentum going forward, and fulfilment of strategic objectives.Centrepoint became the first company to move to a fee-based revenue model, which is a challenging transition. As per the Management, the business transformation is progressing well in the presence of a strong underlying demand for financial advice.


Business Update (Source: Company Reports)

Stock Recommendation: The stock of the company generated returns of 4.0% and 13.04% over a period of one month and three months, respectively. The company’s decision to transform the business model resulted in a record addition to the number of new advisers on the platform. With the strong underlying demand for financial advice, the company is expected to benefit from the transparent fee for service model, that is a critical deliverable in FY20. On the valuation front, the stock is trading at a Price/Book multiple of 1.1x, which is lower than the industry median of 1.3x. Considering the backdrop of the above factors, we give a “Speculative Buy” recommendation on the stock at the current market price of $0.130, up 4% as on 21^st January 2020.

Gage Roads Brewing Co Limited

Good Drinks Strategy Commenced:Gage Roads Brewing Co Limited (ASX: GRB) is involved in brewing, packaging and sale of beer, cider and other beverages.

FY19 Performance: During the year ended 30 June 2019, the company reported revenue amounting to $39.7 million, up 20% on prior corresponding year revenue of $33.2 million. NPAT for the year amounted to $2.6 million as compared to FY18 NPAT of $2.1 million.

Key Insights into Good Drinks’ Progress:The company distributes its products through Good Drinks Australia, GRB’s national sales and marketing team.The team is progressing well, with addition of 13 highly experienced sales professionals, establishment of the head office in Sydney, and recruitment of the head of sales having over 14 years of relevant experience. Within the next 5 years, the company is planning to double the field team, with over 50 professionals. Investment with respect to Good Drinks is expected to increase from $3 million in FY19 to $8 million by FY24. Moreover, the company is also planning to boost sales through potential acquisitions and distribution partnerships with international brands.


Good Drinks Strategy (Source: Company Reports)
 
Valuation Methodology:EV/Sales Multiple Approach

EV/Sales Based Valuation (Source: Thomson Reuters)
 
Note: All the forecasted figures have been taken from Thomson Reuters, NTM: Next Twelve Months

Stock Recommendation: The stock of the company generated negative returns of 3.41% and 9.57% over a period of one month and three months, respectively. Currently, the stock is trading close to its 52-week low of $0.084. In FY19, the company reported strong sales growth across all channels, with growth in sales of higher margin brands resulting in an uplift of 20% in revenue. The company is on track to deliver margin growth and earnings targets for FY20 on the back of Good Drinks brands growth and 5-year Proprietary Brand Strategy. We have valued the stock using EV/Sales based relative valuation method and for the purpose, have taken the peer group - Australian Vintage Ltd (ASX: AVG), Coca-Cola Amatil Ltd (ASX: CCL) and Treasury Wine Estates Ltd (ASX: TWE).As a result, we have arrived at a target price of higher single-digit upside (in percentage terms). Hence, we give a “Speculative Buy” recommendation on the stock at the current market price of $0.085 as on 21^st January 2020.
 

Yojee Limited

YOJ to Raise $2 million via SPP:Yojee Limited (ASX: YOJ) is engaged in developing a sharing-economy based logistics technology, initially targeting the Asia-Pacific region. As per a recent announcement, the company invited its shareholders to participate in the $2 million Share Purchase Plan, which will be used for expansion activities, in combination with the recently completed share placement of $3.5 million.


SPP Timetable (Source: Company Reports)

In another announcement dated 9^th December 2019, the company notified about the positive response in relation to its Cross-border logistics Software, which has gone live across multiple logistics hubs in Singapore, Malaysia, and Thailand, that possess an annual addressable logistics market revenue of $1.2 billion.

September Quarter Highlights: During the quarter ended 30 September 2019, the company signed 14 new commercial customer SaaS agreements. The company also depicted its growing global reputation by signing the first North American Client.

Stock Recommendation: The stock gave negative returns of 3.70% over a period of one month and is currently trading below the average of its 52-week high and low of $0.140 and $0.049, respectively. The company has developed advanced capabilities around multi-level data management, enabling efficient planning and interaction with order management, customs and warehouse systems. YOJ provides a platform that reduces the time and risk associated with manual entry processing, significantly improving customer experience. Considering the recent fund raising for expansion, performance in September quarter, progress in relation to the Cross-border logistics Software, and current trading levels, we give a “Speculative Buy” recommendation on the stock at the current market price of $0.055, up 5.769% as on 21^st January 2020.

 
Comparative Price Chart (Source: Thomson Reuters)

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