LiveTiles Limited

LVT Details

Upcoming AGM: LiveTiles Limited (ASX: LVT) is a Software as a Service (SaaS) provider and a developer of Employee Experience (EX) workplace software through cloud-based platform offerings. LVT has ~1,000 plus corporate customers in Europe, North America, and the Asia Pacific. LVT will hold a virtual AGM on 30 November 2021.

 Q1FY22 (Ending 30 September 2021) Results:

• LVT reported an increase of ~23% YoY in the average ARR (Annualised Recurring Revenue) per Customer to ~$62,800 as of 30 September 2021 owing to the business efforts towards a shift to the wider Enterprise and Mid-market segment.
• The company had ~1,026 customers as of 30 September 2021 including recent new wins of customers such as the UK City Council, a German aeronautics manufacturer, a US developer, and investment manager, and a European global chocolatier, and others.
• The Trailing-twelve-month (TTM) cash receipts stood at ~$54.4 million increasing by ~22% on a pcp basis and a 3-year CAGR of ~88%.
• The net cash operating outflows in Q1FY22 amounted to ~$(1.1) million, down by 56% on a pcp basis due to increased focus on disciplined cost management practices.
• On 30 September 2021, LVT drew a ~$6 million loan which was recently obtained from OneVentures, a venture capital firm.

Average ARR per Customer Highlights; (Analysis by Kalkine Group)

Key Risks: The company faces technological changes, COVID-19 uncertainty, reduced spending from enterprise customers, and foreign exchange rate fluctuations.

Outlook:

• LVT will avail $4 million loan facility soon via a convertible notes issue subject to its shareholder approval at the upcoming AGM on 30 November 2021.
• With these funds, LVT plans to invest in new product development, growth of R&D alliances, avenues for strategic investments to boost revenue growth.
• With a recently held online Employee Experience (EX) event -Let’s Connect with Simon Sinek, LVT generated strong interest in the attendees and witnessed a rise in trials, website traffic, and inquiries with over ~500 qualified leads to follow-up.
• LVT plans to achieve goals set under the newly formulated ‘The Premiership Plan’ post a strategic review. It plans to stay focused on implementing the review recommendations and improve its operational metrics including cash generation and ROI.

Valuation Methodology: EV/Sales Multiple Based Relative Valuation (Illustrative)

Source: Analysis by Kalkine Group

*% Premium/(Discount) is based on our assessment of the company’s NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

Stock Recommendation: The stock of LVT gave a negative return of ~23.33% in the past three months and a negative return of ~32.35% in the past six months. The stock is currently trading at its 52-weeks’ low level of $0.115. The stock has been valued using the Enterprise Value to Sales based illustrative relative valuation method and arrived at a target price of low double-digit upside (in % terms). The company might trade at a slight discount than its peers’ mean EV/Sales multiple, considering its negative cash outgoings, the planned increase in debt facility and drawn debt in Q1FY22, continuing trend of net losses, and negative ROE from FY17-FY21. For this purpose of valuation, few peers like Adacel Technologies Limited (ASX: ADA), Proptech Group Limited (ASX: PTG), Linius Technologies Limited (ASX: LNU), and have been considered. Considering the current trading levels, decent financial results in Q1FY22, new customer wins, upside in valuation, plans to improve operational metrics, disciplined cost control, ~19.9% stake in BrainPac business to strengthen presence in the EX-market, and associated key business risks, we give a ‘Speculative Buy’ rating on the stock at the closing market price of $0.115, as of 12 November 2021.

LVT Daily Technical Chart, Data Source: REFINITIV 

SelfWealth Limited

SWF Details

Director’s Shareholding Change: SelfWealth Limited (ASX: SWF) offers an online share trading platform for clients. On 26 October 2021, Director, Robert Edgley increased his shareholding to ~3.72 million securities via an on-market purchase of 553,250 shares. The securities were issued as short-term incentive entitlement for FY20/21 to the Director and the issuance was approved in the AGM held on 21 October 2021. On 21 October 2021, Anthony Lally, ceased to be a director in SWF.

Q1FY22 Highlights:

• The company posted operating revenue of ~$5.5 million, up by ~32% YoY in Q1FY22 due to a significant rise in trading revenue & volume.
• The active traders (portfolios) rose by ~86% YoY to ~107,461 in Q1FY22 from ~57,816 in Q1FY21.
• The quarterly trade volume increased by ~15% YoY to 435,620 owing to increased volatility experienced in September month.
• The client cash on the platform registered ~46% YoY growth to ~$600 million in Q1FY22.
• SWF enhanced client engagement through content development and weekly investment webinars for customers.
• The company is delivering its strategy by adding value via product innovations such as instant deposits, live pricing, and integration of ESG data.
• SWF held ~$17.5 million cash and cash equivalents and have no outstanding debt as of 30 September 2021.

Active Traders & Operating Revenue Growth Highlights; (Analysis by Kalkine Group)

Key Risks: The company faces regulatory changes, credit risk, investment in technology due to advancements, changes in customer preferences, COVID-19 uncertainty, & market volatility.

Outlook:

• The weekly investment webinars are generating high levels of traction and inbound referrals, thereby signalling higher client involvement.
• SWF focuses on cryptocurrency development, expansion in a new overseas market, and User Experience enhancements to desktop experiences and native mobile apps in Q2FY22.
• With ~$11.74 million funds raised from placement and SPP offer recently, the company is progressing towards strategic marketing and an updated approach for data & analytics.
• SWF is exploring avenues to deliver additional value and expand wealth -creation to customers besides offering transparent pricing.

Stock Recommendation: The stock of SWF gave a negative return of ~17.80% in the past three months and a negative return of ~38.77% in the past six months. The stock is currently trading lower than the 52-weeks’ average price level band of $0.285 - $0.795. On a TTM basis, the stock of SWF is trading at an EV/Sales value multiple of ~3.9x lower than the industry median (Investment Banking & Investment Services) of ~4.6x, and thus seems undervalued. Considering the current trading levels, growth in active traders, operating revenue, and trading volume, product innovations in Q1FY22, plans to rollout cryptocurrency and overseas expansion plans in Q2FY22, valuation on a TTM basis, and associated key business risks, we give a ‘Speculative Buy’ rating on the stock at the current market price of $0.305, as of 12 November 2021, 10.30 AM (GMT+10), Sydney, Eastern Australia.

SWF Daily Technical Chart, Data Source: REFINITIV  

Compumedics Limited

CMP Details

Key Takeaways of FY21: Compumedics Limited (ASX: CMP) is a developer and manufacturer of diagnostics devices for diagnosing sleeping disorders, monitoring neurological disorders, and ultrasonic monitoring of blood flow through the brain. The company operates in Europe, Asia Pacific, the Middle East, and the US.

• The company posted steady revenue growth of ~2% YoY to ~$35.7 million in FY21.
• The Underlying EBITDA was reported to be up ~13% on FY20 to ~$2.6 million in FY21 due to cost efficiencies and improved EBITDA margin.
• The company sold Nexus 360, a professional cloud sleep diagnostics solution to ~56 customers at sites in Australia & the US in FY21. It generated ~$1.1 million in revenues in FY21 due to COVID-19 related lab closures.

Cash & Cash Equivalents Highlights; (Analysis by Kalkine Group)

Key Risks: The company faces the risk of lab closures, limited hospital access, COVID-19 challenges, and expansion to new markets for distribution scale-up and growth.

Outlook:

• CMP is progressing with efforts to develop eHealth, a sleep diagnostic solution for major markets. It aims to grow sleep diagnostics’ sales in Asia, including China, and focus on the growth of the neurodiagnostic and monitoring market in Japan.
• CMP plans to expand the COVID-19 multi-modal capability applications of Somfit, an e-Health sleep solution besides the targeted ones and is in discussions with interested parties to tap market opportunities.
• It plans to release a new range of ambulatory products for sleep and neurology in FY22.
• The company is advancing on the pre-installation work for the second phase of its first MEG system to the Borrow Neurological Institute in Phoenix in the US. It plans to sell at least 2 MEG systems in FY22. Growing US business and staff retention remain a priority for the company.
• CMP aims to expand in the German market and continue growth in France and other European regions.

Stock Recommendation: The stock of CMP gave a negative return of ~23.07% in the past three months and a negative return of ~14.63% in the past six months. The stock is currently trading at its 52-weeks’ low level of $0.350. On a TTM basis, the stock of CMP is trading at an EV/Sales value multiple of 1.7x lower than the industry (Healthcare Equipment & Supplies) median of 9.5x, thus seems undervalued. Considering the current trading levels, steady revenue growth, improved EBITDA margins, consistent cash position from FY17-FY21, valuation on a TTM basis, plans to market distribute MEG and Somfit solutions, and expand market reach, and associated key business risks, we give a ‘Speculative Buy’ rating on the stock at the closing price of $0.350, down by ~1.409% as of 12 November 2021.

CMP Daily Technical Chart, Data Source: REFINITIV

Note 1: The reference data in this report has been partly sourced from REFINITIV.  

Note 2: Investment decision should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and subject to the factors discussed above.

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

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