Fastbrick Robotics

Global Agreement to push growth: Fastbrick Robotics Ltd (ASX: FBR) has performed well on the bourses over past six months on the back of positive developments happening around the company. Recently, the company has signed an agreement with Wienerberger AG with the objective of expanding footprints into the European markets where Wienerberger is already an established player. Wienerberger AG is the largest clay block producer with 193 production sites across 30 countries. Besides this, the company has announced that the Dynamic Stabilization testing of Hadrian X has been concluded. The test results reveal that the robot can successfully place the block with the utmost precision despite the external forces. On the financial front, the company posted higher revenue in FY18 at $535,486 compared to $258,378 in FY17. However, loss for the period contracted to $7,115,679 in FY18 compared to $2,567,107 in FY17. It was mainly impacted by the rise in share-based payments, directors’ and employee benefits and other expenses. As of 30 June 2018, the company enjoys virtual debt-free status along with decent cash & cash equivalent reserve of $21,956,657. The current ratio stood at 10.71x in FY18 which is above the industry median of 1.34x.

Meanwhile, the stock has generated a positive return of 17.86% over the past six months and looks promising at current levels. In last one month, the stock has fallen by about 8.3% and the volatile trend is continuing. Positive developments such as successfully testing of Hadrian X and global agreement with Wienerberger would add to the growth and positive outlook for the company. Given the mix of scenario, we have a wait and watch view on the stock at the current market price of $0.165, as we await further growth catalysts that can mitigate the prevailing volatility.
 

Buddy Platform

Loss still maintains pressure: Buddy Platform Ltd (ASX: BUD) has been under pressure as the company posted loss in its FY18. Even though the company posted higher service revenue from ordinary activities at A$ 2,083,941, it could not trickle down to the bottom line with the net loss for the year coming in at A$13,877,497. The bottom line was mainly impacted by a rise in the cost of sales, increased advertising & marketing expenses, and rise in employee expenses. On the other hand, the company has recently announced that its work with Ohm program has expanded with certifications of eight new third-party meters and one new sensor. Importantly, the company has been posting losses of over five years now which draws concern for the shareholders. The company, however, posted the strong cash balance of $22.37 million as at June 30, 2018 over $6.1 million in the previous comparative period.

FY18 – Consolidated P&L (Source: Company Reports)

Meanwhile, the stock has generated negative YTD return of 55.56% and is trading around its 52-week low. We believe that there is lack of any positive catalyst at the current juncture which can boost the stock higher. Mounting losses and declining margins are not expected to turn around anytime soon. The stock can be avoided as of now at the current market price of $0.120.
 

Volpara Health Technologies

Operating Expenses impact bottom-line: Volpara Health Technologies Ltd (ASX: VHT) is trading near its 52-week high, boosted by good results and other recent developments. In the Q1 FY19, the company expanded its SaaS customer platform to 85 by adding 28 new customers to the VolparaEnterprise platform. This is the highest number of customers added in any quarter. The company enjoys rich cash position with cash reserve of NZ$22.8 Mn at the end of the first quarter 2019. However, VHT is looking at the higher cost this year, pertaining to aggressive growth.
In another release on ASX, the company informed the market that the group has recently appointed two new directors while one director stepped down. The company has managed to make the recurring revenue as major part of their revenue this year indicating the changing product Mix.



Revenue Mix Trend (Source: Company Reports)

This year, the company has shifted from the one-off license regime to a SaaS business model which could help in revenue predictability and revenue growth in the long run. Also, the company managed to cut down on the cost of delivery and maintenance by transitioning the customers to the cloud. Volpara successfully raised capital of A$20 Mn which would be utilized to expand the sales team in the United States and NZ research and development teams. Meanwhile,the stock has generated a positive YTD return of 29.50% and is currently trading around its 52-week high. Although there are numerous positive factors that would ensure better value to shareholders, we presume that at the current level, the price has discounted all the positive developments. In the near term, there could be some price correction in the stock. We, therefore, give an “Expensive” recommendation on the stock at the current market price of $0.900, suggesting that the investors should wait for a few more trading sessions to get the better levels for entry.
 

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