Vista Group International Limited

VGL Details

Highest 2018 Revenue from Cinema Segment:Vista Group International Limited (ASX: VGL) is engaged in the sale, support, and associated development of software for the film industry. The company recently updated that the voting power of Investment Services Group Limited reduced from 6.84% to 5.72%. As per another announcement, the company updated on the appointment of Matthew Cawte as the new CFO, effective from 7 August 2019.

5-Year Revenue Growth: From the period starting 2014 to 2018, the company witnessed an upward trend in revenue with a CAGR growth of 29%.


5-Year Revenue Growth (Source: Company Reports)

FY18 Highlights: During the year, the company generated revenue amounting to NZ$130.7 million, with the highest revenue from the Cinema segment at NZ$82.4 million. EBITDA for the period amounted to $29.2 million, highest in case of Cinema segment at $25.6 million.


Segment Performance (Source: Company Reports)

Stock Performance: The stock of the company generated returns of ~53% in the last 6-months. Currently, the stock is priced close to its 52-week high level of $6.000. In FY18, the company witnessed revenue growth of 23% over FY17, representing the fifth consecutive year of more than 20% revenue growth. The period was also marked by an increase in EBITDA and improved operating cash position. The company is likely to release 1HFY19 results on 29 August 2019. Considering the hefty gains in share price, we are of the view that most of the positives are factored in at the current level. We look forward to further catalyst to support the momentum in stock price. Additionally, the upcoming results for 1HFY19 will also be a key event to watch out for. Therefore, we have a wait and watch stance on the stock at the current market price of $5.500, down 4.181% on 06 August 2019.


VGL Daily Technical Chart (Source: Thomson Reuters)
 

Bravura Solutions Limited

BVS Details

Strong Growth in Recurring Revenue:Bravura Solutions Limited (ASX: BVS) is engaged in the development, licensing and maintenance of administration and management software applications. The company recently updated that the voting power of Wellington Management Group LLP and its related bodies corporate increased from 9.86% to 10.90%.

With respect to the GBST offer update, the company has withdrawn the non-binding conditional indicative proposal issued for the acquisition of 100% ordinary shares of GBST through a cash offer of $3.00 per share.

1HFY19 Highlights: During the first half, the company generated revenue amounting to $127.4 million, up 24% in comparison to pcp revenue of $102.9 million. Recurring revenue for the period went up by 31% on pcp and represented 72% of total revenue. EBITDA for the period amounted to $23.8 million, up 28% on prior corresponding period. NPAT for the period stood at $16.3 million, up 15% in comparison to $14.2 million in pcp. The company declared an interim dividend amounting to 5.3 cents per share.


Key Metrics (Source: Company Reports)

In addition, the period saw two new Sonata contracts with significant growth in Sonata revenue, which now makes up almost all of Wealth Management.

FY19 Guidance: Due to the strong demand during the first half, the company has revised FY19 EPS growth guidance to be in mid-to-high-teens.

Stock Recommendation: The stock of the company generated returns of 2.70% over a period of 1 month. During the first half, the company delivered growth across all key metrics, including revenue, EBITDA, and NPAT. Recurring revenue also reported record growth of 31%. The period saw the EBITDA margin expand by ~300 bps to 33%. Going forward, the company has a strong sales pipeline from new clients. The company is expected to reap the benefits out of strong demand in the UK, Australia, South Africa, Asia, and New Zealand, that led to an upward revision in FY19 EPS growth guidance. Considering the aforesaid factors, we give a “Buy” recommendation to the stock at a current market price of $4.450, down 2.626% on 06 August 2019.


BVS Daily Technical Chart (Source: Thomson Reuters)
 

LiveTiles Limited

LVT Details

Rapid Increase in ARR:LiveTiles Limited (ASX: LVT) is engaged in the development and sale of digital workplace software. As per a recent announcement, the company has issued 6,810,234 fully paid ordinary shares at an issue price of $0.41899 per share.

June Quarter Highlights: During the three months ended 30 June 2019, the company generated customer cash receipts amounting to $7.9 million, rising 52% in comparison to the March quarter. Net operating cash flow for the quarter was reported at $6.2 million. As at 30 June 2019, the company had 919 paying customers, reflecting substantial enterprise customer base growth. Annualised Recurring Revenue as at 30 June 2019 reached $40.1 million, up 167% in last 12 months period.

   
Growth in Customer Cash Receipts (Source: Company Reports)
 
Annualised Recurring Revenue Growth (Source: Company Reports)

Outlook: The company expects to deliver another year of strong customer and revenue growth in FY20 on the back of continued investment in products, partners and sales & marketing channels. Annualised Recurring Revenue as at 30 June 2021 is being targeted at $100 million.

Stock Recommendation: The stock of the company generated negative returns of 4.44% and 5.49% over a period of 1 month and 3 months, respectively. The company has witnessed a rapid increase in annualised recurring revenue, as depicted by 167% growth as at 30 June 2019, over the last 12 months. As at 30 June 2019, customer numbers also grew strongly, adding 383 customers over 12 months period. The period was also characterised by strong growth in customer cash receipts. The company seems well-positioned to report revenue and customer growth in FY20 with continued investment. Based on the above factors, we give a “Speculative Buy” recommendation on the stock at the current market price of $0.415, down 3.488% on 06 August 2019.


LVT Daily Technical Chart (Source: Thomson Reuters)
 

Afterpay Touch Group Limited

APT Details

Underlying Risk from AUSTRAC’s Notice: Afterpay Touch Group Limited (ASX: APT) is a multinational-technology driven payments company. The company recently updated that The Goldman Sachs Group, Inc has been ceased to be a substantial shareholder.

AUSTRAC Notice: In the month of June, the company’s subsidiary, Afterpay Pty Limited, received a notice from AUSTRAC, requiring it to appoint an external auditor to conduct an audit in relation to its Anti-Money Laundering/Counter Terrorism Financing (AML/CTF) program. The company recently appointed Neil Jeans as the external auditor. As a result of the above scenario, the company has also decided to defer the Share Purchase Plan until the final audit report prepared by the external auditor has been considered.

Business Update: For the 11 months period to 31 May 2019, the company recorded underlying sales amounting to $4.7 billion, up 143% on the prior corresponding period. At the end of the period, the company had over 4.3 million active customers transacting on its platform. The company witnessed strong growth in the US market, with over 1.5 million active customers at the end of May. US underlying sales were valued at approximately $780 million for the 11 months period.


Performance Summary (Source: Company Reports)

Stock Recommendation: The stock of the company generated returns of 64.22% over the period of 1 year. The company has maintained a growth momentum in underlying sales and active customer & merchants, as depicted by the business update for 11 months ended 31 May 2019. While Australia and New Zealand witnessed strong in-store rollout, United States grew remarkably in terms of underlying sales and active customers. However, the business has entered into a risky zone pursuant to the notice issued by AUSTRAC for an audit of AML/CTF program at Afterpay Pty Limited, audit report for which is yet to be released. Given the above scenario, we have a wait and watch view on the stock at the current market price of $22.340, down 4.936% on 06 August 2019.


APT Daily Technical Chart (Source: Thomson Reuters)
 

Xero Limited

XRO Details

Rapid Growth in Subscriber Base:Xero Limited (ASX: XRO) provides an online business platform to small businesses and their advisors. The company recently updated that it has issued 24,101 fully paid ordinary shares.

FY19 Highlights: During the year ended 31 March 2019, the company reported operating revenue amounting to $552.8 million, up 36% in comparison to the previous year. Annualised Monthly Recurring Revenue for the period stood at $638.2 million, representing 32% growth on pcp. At the end of the period, the company had a total of 1.818 million subscribers, up 31% on pcp. The company reported free cash flow amounting to $35.0 million as compared to the prior year value of $6.5 million.


FY19 Financial Highlights (Source: Company Reports)

Outlook: The company expects free cash flow in FY20 to be a similar proportion of total operating revenue in the same period.

Stock Recommendation: The stock of the company generated returns of ~19% and 46.34% over a period of 1-month and 1 year, respectively, with the market capitalisation of $9.01 billion. Currently, the company’s stock is priced close to its 52 weeks high level of $66.750. In FY19, the company delivered a decent result in terms of first positive free cash flow, addition of more than 1 lakh subscribers within a six-month period and positive bottom-line result in the second half. However, the company’s net loss for the period increased to $27.1 million due to impairments in the first half of the year. In the light of the profitability position of the business and the current trading level, we suggest investor to adopt a wait and watch view on the stock at the current market price of $59.970, down 5.988% on 06 August 2019.


XRO Daily Technical Chart (Source: Thomson Reuters)
 

Appen Limited

APX Details

Healthy Growth in Underlying EBITDA in FY18:Appen Limited (ASX: APX) engages in the provision of quality data solutions and services for machine learning and artificial intelligence applications for global technology companies. The company recently updated the exchange that Vinva Investment Management ceased to be a substantial shareholder.

The company recently updated that it will release the financial result for the half year ended 30 June 2019 on 29 August 2019.

Financial Highlights: During the year ended 31 December 2018, the company reported revenue amounting to $364.3 million, up 119% on the prior year. Underlying EBITDA for the period stood at $71.3 million, up 153% on the previous year. The company also improved on underlying EBITDA margins at 19.6% in 2018, as compared to 16.9% in 2017. Underlying NPAT for the period was reported at $49.0 million, up 148% on the prior year.


Financial Results (Source: Company Reports)

The company’s Content Relevance division reported the highest revenue growth and margin expansion during the period, performing remarkably in the fourth quarter.

Outlook: The company expects FY19 revenue to be approximately 40-50% higher than FY18. In addition, the company expects in-year ARR growth of ~50%-60%. Underlying EBITDA for the year is expected to improve with growth expected to be around 30-40% in comparison to FY18.

Stock Recommendation: The stock of the company generated returns of 138.21% over the period of 1 year. The company reported robust performance in 2018 with remarkable growth across key financial metrics, including revenue, EBITDA, and NPAT. The strong growth in 2018 was a result of accelerating AI market and high demand for quality training data. However, the company is yet to release the financial results for 1HFY19 on 29 August 2019. We suggest investors to keep a close eye on the scheduled upcoming result. Considering the stock price movement in the last 1-year, upcoming results and aforesaid factors, we have a wait and watch stance on the stock at the current market price of $25.900, down 3.61% on 06 August 2019.

 
APX Daily Technical Chart (Source: Thomson Reuters)

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