Stocks’ Details
 

LiveHire Limited

 
Stellar Operational Performance:LiveHire Limited (ASX: LVH) provides a Talent Acquisition & Engagement platform, delivering a proactive sourcing and talent mobility solution called Live Talent Communities. Recently, LVH reported the issuance of 5,250,000 fully paid ordinary shares (Loan Back Shares) and 1,500,000 unlisted options (options).
 
Q1FY20 Operational Highlights for the Period Ended 30 September 2019: LVH came up with its quarterly results, wherein the company reported Annualised Recurring Revenue (ARR) at $2.7 million, up 65% on y-o-y basis aided by the addition of 10 new clients.Annualised Recurring Revenue Per Client (ARPU) increased to $31,582, driven by 86 customers, depicting an increase of 46% on yoy basis. The business reported 12-month trailing cash receipts at $3.5 million, up 58% on y-o-y terms. Talent Community Connections (TCCs), during the first quarter, increased to 1.38 million, up 90% y-o-y basis. During the period the business showed significant step-change in expanding the capability and functionality of the LiveHire platform followed by the successful launch of four new major product modules. LVH reported improved activity of the Direct Sales team, which translated to revenue growth, delivering $387,000 in Total Annual Contract Value. 

 

Q1FY20 Key Business Metrics (Source: Company Reports)
 
Guidance:LVH is into advanced discussions with new MSP partners in the United States to execute on its US expansion strategy. Among its 13 channel partners, the company reported nine channels which are in pipeline building phase.
 
Stock Recommendation:  The stock of LHV is quoting at $0.230, with a market capitalization of ~$71.01 million. Currently, the stock is quoting at the lower band of its 52-week trading range of $0.215 to $0.710. The stock has corrected 21.67% and 38.16% in the last three months and six months, respectively. LVH continues to support existing channel partners in building out their pipelines of well-fitted clients to be introduced to LiveHire technology. Looking at the price levels, stock performance, valuation and business prospects, we recommend a ‘Speculative Buy’ on the stock at the current market price of $0.230, down 2.128% as on 16 December 2019.
 

LiveTiles Limited

Decent Performance in Q1FY20:LiveTiles Limited (ASX: LVT) is engaged in the development and sale of business software in Australia and overseas. Recently, LVT announced its acquisition of CYCL, wherein the company issued 42,605,922 shares as part of the upfront consideration for the acquisition.

Q1FY20 Financial Highlights for the Period Ended 30 September 2019: LVT announced its quarterly results, wherein the company reported annualized recurring revenue of (ARR) of $42.9 million, up 131% on pcp terms. The company reported average ARR per customer growth of 37% on y-o-y basis aided by a higher proportion of new enterprise customers, product cross-sell/bundling and higher penetration of existing customers.The business reported successful acquisition of Wizdom, Europe’s leading ‘plug and play’, Microsoft-aligned digital workplace software business, during February 2019. The quarter was marked by large and rapidly growing addressable market along with longer sales cycle, higher average contract value and retention rate.


Q1FY20 Operational Highlights (Source: Company Reports)

Guidance: The business indicated a strong pipeline of sales opportunities for FY20 and estimated Q2 opex of ~$16.2 million. The company is targeting ARR of $100 million in ~6.25 years since the initial product launch. 
 
Valuation Methodology:Enterprise Value to Sales based Approach

Enterprise Value to Sales Based Valuation (Source: Thomson Reuters)

Note: All forecasted figures and peers have been taken from Thomson Reuters, *NTM-Next Twelve Months

Stock Recommendation:The stock of LVT is trading at $0.280, with a market capitalization of $240.92 million. The stock is trading at the lower band of its 52-week trading range of $0.265 and $0.610. The stock has generated negative returns of 29.11% and 35.63%. LVT stands as one of the world’s fastest-growing SaaS companies, and the business delivered strong growth in customer cash receipts during Q1FY20. Considering the aforesaid facts, we have valued the stock using one relative valuation method, i.e., Enterprise Value to Sales Multiple and arrived at a target price of higher single-digit (in % terms).Hence, we recommend a ‘Speculative Buy’ on the stock at the current market price of $0.280 as on 16 December 2019.

The Citadel Group Limited

Recent Acquisition to Lead Operational Growth:The Citadel Group Limited (ASX: CGL) is engaged in the provision of software and services, product sales and installation, and consulting and professional services in the technology sector across Australia. As per a recent market update, the company advises that 946 fully paid ordinary shares are being released from voluntary escrow on 30 December 2019.

FY19 Highlights for the Period Ended 30 June 2019: CGL reported its full-year financial results, wherein the company reported total revenue of $99.2 million, down 6.9% on y-o-y basis. Net profit during the period came in at $10.9 million as compared to $19.4 million in FY18.CGL’s gross profit decreased to $45 million from $55.5 million in FY18. Revenue from Software/Software-as-a-Service (SaaS) stood at $34.2 million, representing 34% of the total revenue in FY19. During the period, the company reported retention of core managed services contracts, including DRMS in defense. The company also reported a new 10-year agreement signed with Royal Adelaide Hospital, which includes provision of support, maintenance and technology refresh services to the latter. 


FY19 Financial Highlights (Source: Company Reports)

Valuation Methodology:Price to Earnings Multiple Approach

Price to Earnings Based Valuation (Source: Thomson Reuters)

Note: All forecasted figures and peers have been taken from Thomson Reuters, *NTM-Next Twelve Months

Trading Update: In Q1FY20, revenue has been in-line with expectations. The company also notified about the confirmation of deferred contracts from Q4FY19 in the Government/Defence and Tertiary Education sectors and will now contribute to the remainder of FY20 and beyond.

Guidance: For FY20, the company is expecting low double-digit organic revenue growth for FY20 with margins broadly consistent with FY19, excluding Noventus. The company is expecting a revenue of ~$18 million from Noventus and an EBITDA of $2 million in FY20.

Recommendation:The stock of CGL is trading at $4.36 with a market capitalization of $211.03 million. The stock is trading at the lower band of its 52-week trading range of $2.94 and $8.90.The stock has corrected by 44.92% in the last one year. The company acquired Noventus Pty Ltd (Noventus), a systems integrator which is likely to strengthen the company’s operations across Defence, National Security and Government vertical. Considering the aforesaid facts, we have valued the stock using one relative valuation, i.e., Price to Earnings Multiple and arrived at a target price of lower double-digit upside (in % terms). Looking at the current trading levels, price movements, recent acquisition and business prospects, we recommend a ‘Speculative Buy’ on the stock at the current market price of $4.360, up 1.869% as on 16 December 2019.

K2 Asset Management Holdings Ltd

Partnership with Principals Funds to Enhance Business Presence:K2 Asset Management Holdings Ltd (ASX: KAM) provides services related to fund management. Recently, the company reported total Fund Under Management at $135.1 million and a net outflow of $9.3 million, as at 01 December 2019.

FY19 Financial Highlights for the period ended 30 June 2019: KAM announced its full-year results, wherein the company reported revenue at $4,798,725, down 65.91% on y-o-y basis.The company reported a net loss of $1,341,887, down 125.71% on y-o-y basis. The company reported higher fund operating expenses of $369,385 as compared to $27,557 in FY18. During the year, the company reported FUM at $239.8 million.


FY19 Income Statement Highlights (Source: Company Reports)

Stock Recommendation: The stock of KAM is trading at $0.043, with a market capitalization of $10.61 million. The stock is trading at the lower band of its 52-week trading range of $0.039 and $0.095.The stock has corrected by 12% and 48.84% in the last six months and one year, respectively. In FY19, the company partnered with Principals Funds Management to enhance its distribution channel and access to quality participants in the wholesale market. The stock is trading at an enterprise value (EV) to sales multiple of 2.2x on trailing twelve months basis as compared to the industry median of 5.9x. The stock is available at a price to book value of 0.8x on TTM basis as compared to the industry median of 1.3x.  Considering the aforesaid facts, current trading levels, valuations, price movements and partnership with Principals Fund, we recommend a ‘Speculative Buy’ on the stock at the current market price of $0.043, down 2.273% as on 16 December 2019.

Comparative Price Chart (Source: Thomson Reuters)

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.