Stocks’ Details

Appen Limited

1H 2019 Results Highlights:Appen Limited (ASX: APX) provides provision of quality data solutions and services for machine learning and AI applications for auto manufacturers, global technology companies and various government agencies. The market capitalisation of the company stood at $2.62 billion as on 6^th November 2019.

APX reported an outstanding revenue growth of 60% in 1H 2019 to $245.1 million. Company’s core business performed very strongly this half as speech and image data grew by 85% on the YoY basis. The company reported an underlying EBITDA of $46.3 million, up 81% and underlying EBITDA margin increased by 210 bps to 18.9% in 1H 2019.

Figure Eight is delivering on its strategic thesis as it is accelerating the company’s technology roadmap, diversifying revenues and increasing market for them.The size and number of joint opportunities are more than their expectations and Figure Eight’s government footprint is exceptional with very high barriers to entry. The company has declared a partially franked interim dividend of 4 cents per share, no change from last year.


1H 2019 Highlights (Source: Company Reports)

Outlook: With a continued investment in technology, sales and marketing, government markets and China, the company is strengthening its position in a high growth market.The company’s full-year underlying EBITDA for the year ending December 31^st, 2019, including Figure Eight, which is trending to the upper end of $85 to $90 million (at A$1=US$0.74 Aug-Dec 2019).

Stock Recommendation: Overthe period of FY14 to FY18, the company has reported a good CAGR in revenues to 63.48%. The company has ROE of 35.8% in FY18, which is above the industry median of 15.7% and, therefore, it can be said that the company has been declaring decent returns to its shareholders. The stock is currently trading towards the lower band of its 52-week trading range of $10.15-$32.0. Based on its EBITDA guidance, decent top-line performance in the last five years and current trading levels, we give a "Buy" rating on the stock at the current market price of $19.960 per share, down 7.849% on 6th November 2019.
 

Bravura Solutions Limited
 

Bravura Acquires FinoComp:Bravura Solutions Limited (ASX: BVS) is a provider of software products and services to clients, operating in the funds administration and wealth management industries. The market capitalisation of the company stood at $1.01 billion as on 6^th November 2019.

Bravura Solutions Limited announced that it is going to acquire FinoComp, an Australian software company, for a total value of $25 million. BVS’s technical capabilities will increase after the acquisition and it will generate convincing opportunity to deliver “plug and play” solutions to the broader addressable market. FinoComp will bring new wealth management clients and cross-sell opportunities to BVS’s existing clients.

The company is expected to generate 50% EBITDA growth per year due to strong operational leverage on the back of significant R&D over the same period from a forecast of $1.2 million in FY20.

Outlook for FY20: The company has a strong pipeline, mainly driven by significant project activity from existing clients and sales opportunities from new clients. The company is well placed to take the benefit of strong demand for its product portfolio across all the markets. As a result of new sales opportunities and strong recurring revenues, the company is expecting NPAT growth of mid-teens in FY20.


Strong Revenue and Earnings Growth (Source: Company Reports)

Stock Recommendation: BVS has improved its EBITDA margins by 180 bps in the last one year. Its EBITDA margin stood at 18.2% in FY18 and 20.0% in FY19, which shows improvement in its operating performance. The company has reported a CAGR of 14.14% in revenues in last five years. The company has an asset turnover ratio and ROE of 0.87x and 16.2%, respectively, in FY19. Its EV/Sales multiple stood at 3.0x, which is below the industry median of 4.9x on TTM basis. Currently, the stock is trading towards the lower band of its 52-week trading range of $3.47-$6.27 with PE multiple of 27.67x. Based on the guidance of NPAT growth, improving EBITDA margins and current trading levels, we give a "Buy" rating on the stock at the current market price of $4.030 per share, down 2.892% as on 6th November 2019.
 

LiveTiles Limited

LiveTiles Invited to Present at Microsoft Ignite:LiveTiles Limited (ASX: LVT) is engaged in the development and sale of business software in Australia and other countries. The market capitalisation of the company stood at $249.43 million as on 6^th November 2019.

The company has been invited to present at Microsoft Ignite, a Microsoft’s largest global customer event. More than 25,000 attendees will attend the event, and major portion of the customers are already subscribed to core Microsoft platforms Office 365, Microsoft Teams and Azure.The company’s core products, like Wizdom and Hyperfish, can be deployed and used within Microsoft’s Teams collaboration platform.

Highlights of Q1FY20 Results: The company reported annualised recurring revenue (ARR) at $42.9 million as at 30^th September 2019, up from $40.1 million from the previous quarter. ARR has grown by 131% YoY and is up 8.6x in 2 years. The first quarter of FY20 saw strong APAC region performance, offset by seasonal buying patterns in the US and European regions.

There were 952 paying customers as at 30 September 2019, which reflected ongoing customer base growth.

YoY ARR Growth (Source: Company Reports)

Outlook for FY20: With the continued investment into products, partners and sales and marketing channels, the company expects to deliver another year of strong customer and revenue growth in FY20. Its objective is to organically grow ARR to at least $100 million by 30 June 2021.

Stock Recommendation: The company has reported a CAGR growth of 197.8% in its revenue over the period of FY15 - FY19; thus, it can be said that company is growing rapidly. The stock has corrected ~32.97% in the last 6 months and is currently trading close to the lower band of its 52-week trading range of $0.265 - $0.610. Hence, considering the above-stated facts and current trading levels, we give a "Speculative Buy" recommendation on the stock at the current market price of $0.290 per share, down 4.918% as on 6th November 2019.
 

Pushpay Holdings Limited

Highlights of 2020 Interim Results:Pushpay Holdings Limited (ASX: PPH) provides a donor management system, to the faith sector, non-profit organisations and education providers in Australia, Canada, the US and New Zealand. The market capitalisation of the company stood at $806.52 million as on 6^th November 2019.

In the six months ended 30^th September 2019, the company’s total revenue increased by 30% to US$57.4 million, led by targeted implementation of their strategy, increasing team capabilities and expertise, and responsible investment into product design and development.Company’s gross margins improved by 8 percentage points, from 57% to 65%. Although, the gross margins were weaker in the second half of the financial year, the company expects gross margin to stabilise around the current levels over the remainder of the current financial year. It has reiterated the margin guidance of over 63% for the year ending 31^st March 2020.


Gross margin Percentage (Source: Company Reports)

Outlook: Pushpay Holdings Limited expects decent revenue growth in the coming years, as it continues to execute on its strategy to gain market share in the medium term. The company restates its operating revenue guidance of US$121.0 million to US$124 million for the year ending 31^st March 2020. EBITDAF is expected to be between US$23.0 million to US$25.0 million.

Stock Recommendation: In FY2015-FY2019, the company has shown 188.21% CAGR in its revenue. It has ROE of 60.3%, above the industry median of 15.7%. Currently, the stock is trading below the average of 52-week high and low levels of $3.850 and $2.640, respectively, with PE multiple of 30.30x. Based on the aforesaid parameters coupled with decent outlook and current trading levels, we give a "Buy" recommendation on the stock at the current market price of $3.040 per share, up 3.754% as on 6th November 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.