Stocks’ Details
 

Yojee Limited

Strong Capital Position and No Funds Requirement: Yojee Limited (ASX: YOJ) is mainly focused on the development of a sharing-economy based logistics technology. The market capitalisation of the company stood at $ 15.73 million as on 27^th March 2020. Despite the rising fear of COVID-19 (Coronavirus) as well as the adverse global financial market impact, the company maintains a strong balance sheet and cash runway. Moreover, it has no immediate requirement for raising funds and possesses enough funding for the 2020 Calendar Year.

For the week commencing 23 March 2020, the company had a robust cash position of around $5.9 million. The company also maintains a simple capital structure with nil debt or debt instruments on its balance sheet. The below picture gives an overview of financial performance for 1H FY20:


Financial Overview (Source: Company Reports) 

Future Aspects: Yojee is currently focused towards increasing its sales organisation as well as execution on new marketing strategies.

Stock Recommendation: The company is in a decent position to continue ramp-up activities across 2020 on the back of several ongoing discussions with potential clients to sign-up to its subscription-based platform. Current ratio of the company stood at 4.50x in 1H FY20 as compared to the industry median of 1.72x. This reflects that Yojee is in a decent position to address its short-term obligations against the broader industry. The stock of Yojee is currently trading at a price to book multiple of 1.7x against the industry median (Technology) of 2.2x on TTM basis. Hence, in light of strong funding position, nil debt, and focus on growing sales, we give a “Speculative Buy” recommendation on the stock at the current market price of $0.016 per share on 27^th March 2020.

BrainChip Holdings Ltd

Requirement of Investment: BrainChip Holdings Ltd (ASX: BRN) provides ultra-low power high performance AI technology with a market capitalisation of $56.17 million as on 27^th March 2020. As per the recent market update, BRN would require revenue and investment for fulfilling its mission of commercialising its groundbreaking technology. In another update, the company announced that Socionext Inc. would offer customers an Artificial Intelligence Platform which includes the Akida SoC of BrainChip. BRN would provide training, technical and customer support, and both the companies would jointly identify target end markets and customers.


Revenue from Operating Activities (Source: Company Reports)

Goal of BRN: Primary goal of the company revolves around securing capital for supporting the commercialization of its technology as well as to increase shareholder value. 

Stock Recommendation:Current ratio of BRN stood at 5.63x against the industry median of 1.69x, which implies that the company possesses a decent position to address its short-term obligations versus the peer group. As per ASX, the stock of BrainChip is trading towards its 52-week lower levels, which could be considered as decent levels for entry. Therefore, considering the decent liquidity position and current trading levels, we give a “Speculative Buy” recommendation on the stock at the current market price of $0.040 per share, down by 4.762% on 27^th March 2020.

Paragon Care Limited

Controlled Measures for COVID-19: Paragon Care Limited (ASX: PGC) is involved in end to end healthcare solutions, which include equipment and service solution for acute, aged and primary care. The market capitalisation of the company stood at $38.86 million as on 27^th March 2020. Recently, the company has notified the market with respect to the business impacts of the control measures undertaken for the outbreak of COVID-19. Paragon has established protocols and procedures in order to ensure the safety of all personnel and to assess and manage potential operations risks.

However, as of now, the company is not in a capacity to determine the likely financial impact of the COVID-19 on the FY20 earnings. During 1H FY20, the revenue of the company increased to $120.7 million. Moreover, gross margin for the period were constant and stood around 38%.


1H FY20 Financial Performance (Source: Company Reports)

Focus for FY20: The company expects to get benefit from the transformation programme in 2H FY20. For FY20, it is continuously focused on high margin products. The company is planning the introduction of group-wide, consistent customer service measurements and KPIs in FY20.

Stock Recommendation: The company finished the first half of the financial year 2020 (31^st December 2019) with the cash balance of around $18 million. Current ratio of PGC stood at 1.43x in 1H FY20 as compared to the industry median of 1.24x. This reflects that the company is in a decent position to address its short-term obligations versus overall industry. PGC has EV/Sales multiple of 0.6x as compared to the industry median (Healthcare) of 6.3x on TTM basis. The stock of Paragon is trading at a price to book multiple of 0.2x against the industry median (Healthcare) of 1.7x on TTM basis. Hence, it can be said that the stock of Paragon Care Limited is currently undervalued.
Thus, considering the decent liquidity position, valuation parameters, and growth in revenue during 1H FY20, we give a “Speculative Buy” recommendation on the stock at the current market price of $0.125 per share, up by 8.696% on 27^th March 2020. It looks like the upside movement in the stock price was due to the release of implemented measures for COVID-19.

 
Comparative Price Chart (Source: Thomson Reuters)

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