Stocks’ Details
 

Xref Limited

 
Sales Up 23% Year Over Year in 1QFY20: Xref Limited (ASX: XF1) is engaged in the development of human resources technology, which offers a customer-centric platform and data-driven applicant insights. On 20^th December 2019, the company announced that it has issued 10,593,939 new fully paid ordinary shares for a consideration of $0.33 per share. 
 
September Quarter Highlights:During the quarter ended 30 September 2019, Xref Limited reported total credit sales of $2.46 million, up 23% year over year and reached record credit usage of $2.24 million, up 32% on 1QFY19.  Cash receipts during the quarter stood at $3.53 million. Net cash outflow in 1QFY20 stood at $1.946 million. The company exited the quarter with a cash balance of $5.245 million.
 

Credit & Sales Usage (Source: Company Reports)
 
Stock Recommendation: As per ASX, the stock of XF1 is trading below the average of its 52-week low-high of $0.310 and $$0.720. The company is on track to launch enhanced products and features and is in a good position to leverage the growth opportunities. During FY19, current ratio of the company stood at 1.31x as compared to the previous year’s ratio of 1.22x.This indicates that the company is now in a healthier position to pay off its current liabilities utilizing its current assets. Considering the performance in September quarter, improved liquidity position, new client wins, and current trading levels, we recommend a “Speculative Buy” rating on the stock at the current market price of $0.345, up by 4.545% on January 17, 2020.
 

LiveTiles Limited

 
ARRUp 130% in 2QFY20: LiveTiles Limited (ASX: LVT) is engaged in the advancement and sale of business software in Australia and overseas. On 3^rd December 2019, the company announced that it has closed the buyout of CYCL and has issued 42,605,922 shares as part of the upfront consideration.
 
December Quarter ARR Highlights: During Q2 FY20 ended 31 December 2019, the company reported strong growth in annualised recurring revenue (ARR) of 130% on YoY basis, which reached $52.7 million. During the quarter, the company also saw solid organic ARR growth of $5.1 million on QoQ basis, on the back of CYCL acquisition.
 

ARR growth (Source: Company Reports)
 
Outlook: The company expects to achieve at least $100 million in ARR by June 30, 2021. Growth in FY20 will be backed by a large and growing addressable market, a pipeline of opportunities in the US, growth in partner/reseller network, etc. The company aims to leverage the opportunity with existing customers through cross-sell, increased penetration and bundling. 
 
Valuation Methodology: P/B Multiple Approach
 

P/BBased Valuation (Source: Thomson Reuters)
 
Note: All forecasted figures and peers have been taken from Thomson Reuters, NTM-Next Twelve Months
 
Stock Recommendation: The company has recorded strong growth in ARR in Q2 FY20 and the figure stood at $52.7 million. As per ASX, the stock of LVT is trading close to its 52-week low of $0.235. We have valued the stock using P/B multiple approach, and for the said purpose, we have considered peers like Citadel Group Ltd (ASX: CGL) Catapult Group International Ltd (ASX: CAT), Rhipe Ltd (ASX: RHP) and Class Ltd (ASX: CL1). Therefore, we have arrived at a target price, which is offering an upside of lower double-digit (in percentage terms).  Therefore, considering the company’s outlook, robust ARR performance in Q2 FY20, and expected upside, we give a “Speculative Buy” recommendation on the stock at the current market price of $0.265 per share, down by 3.636% as on 17 January 2020.
 

SportsHero Limited

 
Positive Response for Kita Garuda App: SportsHero Limited (ASX: SHO) is involved in the advancement of the sports gamification platform and has a market capitalization of $12.14 Mn as on 17^th January 2020. Recently, the company had updated on the positive initial user and engagement outcomes of the soft launch of its ‘Kita Garuda’, built for the Football Association of Indonesia (“PSSI”). A significant increase in downloads and reviews for the app depicted its growth potential.
 
September Quarter Highlights: Cash balance of the company as at 30 September 2019 came in around $1.518 million. Net cash used in operating activities came in at $928K.  In the coming quarter, the company is expecting net cash outflow to be $485K, after making major payments for staff costs, and administration and corporate costs of $200K and $95K, respectively. Product manufacturing and operating costs for the quarter are expected to be ~$150K. 
 

Estimated Cash Outflow (Source: Company Reports)
 
Stock Recommendation: As per ASX, the stock of SHO is trading below its 52-week high of $0.120. The stock has a market cap of $12.14 million, with 328.21 million outstanding shares. The stock has generated a positive return of ~19% on a year-to-date basis.  Considering the long-term partnership with PSSI, successful launch of Kita Garuda app, current trading levels, and the scalability of the business, we give a “Speculative Buy” recommendation on the stock at the current market price of $0.037 per share as on17^th January 2020. 

Metals X Limited

 
Diversified Business Model as Key Catalyst: Metals X Limited (ASX: MLX) is involved in the operation of copper and tin mines in Australia coupled with exploration and enhancement of base metal projects in the region. On 13^th January 2020, the company announced that Yimin Zhang, non-executive director on the Board, will soon resign from his post and Xingwang Bao, has been appointed as the new non-executive director of the company. As per another update, the company announced that one of its Directors, Patrick O’Connorhas acquired 700,000 shares for a consideration of $46,951.59.
 
September Quarter Highlights: During the quarter ended 30 September 2019, revenue from the Renison Tin operations stood at $46.46 million, up from $42.63 million reported in the previous quarter. EBITDA and net cash flow for the quarter stood at $9.3 million and $5.5 million, respectively.
 

September Quarter Highlights (Source: Company Report)
 
What to Expect: With respect to Rension Tin Operations, the focus areas for FY20 would be improving the mine schedule to expand mine grades, processing recovery and overall operational performance.  The company is also aiming for an increase in mining rates to around 1Mtpa in bid to improve ore sorter tin recovery as well as mass rejection.
 
Stock Recommendation: As per ASX, the stock of MLX is trading close to the lower end of its 52-week trading range of $0.064 to $0.446, respectively. The stock has generated a positive return of ~15.38% on a year-to-date basis. The company’s debt to equity stood at 0.09x, lower than the industry median of 0.13x, reflecting financial stability. The company is expecting that it will remain on track for the exploration, mining, processing, production and marketing of its copper and tin concentrates in Australia. Considering the backdrop of the above factors, we give a “Speculative Buy” recommendation on the stock at the current market price of $0.088 per share, down 2.222% as on17^th January 2020.
 

Yojee Limited

 
YOJ Offers to Raise $2 million:Yojee Limited (ASX: YOJ) is involved in the advancement of sharing-economy based Logistics technology. On 13^th January 2020, the company invited its shareholders to join in the Share Purchase Plan (SPP) to raise $2 million. The above funds raised will be merged with the recently finalized $3.5 million share placement, to capitalise on expansion opportunities.
 
Other Recent Updates: On 10^th January 2020, the company issued 40,000,000 fully paid ordinary shares (Placement Shares) at an issue price of $0.05 per share to institutional and sophisticated investors.
 
September Quarter Cash Flow Highlights:The company reported net cash used in operating activities at $1.294 million. The company exited the quarter with cash and cash equivalents of $2.131 million. In the coming quarter, the company is expecting net cash outflow to be $1.457 million,after making major payments for staff costs, and administration & corporate costs of $206K and $555K, respectively. Product manufacturing and operating costs for the quarter are expected to be ~$558K.
 

Estimated Cash Outflow (Source: Company Report)
 
Stock Recommendation: The stock of YOJ has a market capitalization of ~$47.81 million. The stock is quoting close to the lower end of its 52-week trading range of $0.049 - $$0.140. The stock has generated negative returns of ~30% and ~50% in the last three months and six-months, respectively. During the September quarter, the company delivered on its key objectives of increased key customer numbers, high quality delivery on time, rapid deployments to customers, etc. Going forward, it is aiming for executing on core monthly recurring revenue growth and deliver improved financial results. The company’s current ratio stood at 5.35x, higher than the industry median of 1.75x, reflecting a strong liquidity position. Considering the current trading levels, stock price movements, recent share placement and business prospects, we recommend a ‘Speculative Buy’ rating on the stock at the current market price $0.050, down 3.846% as on 17^th January 2020.
 
 
 
Comparative Price Chart (Source: Thomson Reuters)

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