Stocks’ Details

LBT Innovations Limited

Share Purchase Plan Raises $0.4 Million: LBT Innovations Limited (ASX: LBT) is engaged in the development of technology for use in the automation of microbiology laboratory processing. As on 13 August 2020, the market capitalization of the company stood at ~$42.9 million. The company has recently completed its share purchase plan and received applications for 2,296,250 new fully paid ordinary shares, raising $0.36 million. The SPP shares are expected to be allotted on 17 August 2020. The company will use these funds to expand the company’s commercialization activities for the APAS® independence in Europe and the United States, continued development of APAS® technology for the creation of new analysis modules, working capital and costs associated with the Placement and SPP.

LBT Teams with Beckman Coulter: The company has announced a marketing Agent Agreement with a global leader in clinical diagnostics, Beckman Coulter, Inc for three years. Under the agreement, Beckman Coulter will act as a marketing agent for the APAS® Independence in Europe, and will focus on territories of Germany, the United Kingdom and France.

Quarterly Performance: During the quarter ended 30 June 2020, the company made its first sale of APAS® Independence in the US to Hennepin County Medical Center. In the same time span, the company made significant strides to strengthen its cash position and completed a private placement of $8 million. During the quarter, the company reported net cash outflows from operating activities of $485k and a cash balance of $7.1 million.

Quarterly Cash Flow Activities (Source: Company Reports)

Key Risks: LBT expects that the new sales leads will slow down because of the uncertainty caused by COVID-19 pandemic. The restrictions from social distancing will impact sales and marketing activities. The potential distribution partners have also been impacted by COVID-19. The company is also exposed to a variety of risks including interest rate risks, foreign currency risks, liquidity risks and credit risks.

Stock Recommendation: LBT is focused on maintaining its positive operational momentum and on existing sales leads. It is also aiming to secure a distribution partner and maintaining momentum on key applications essential for the improved utility of the APAS® Independence. On a Trailing Twelve Months basis (TTM), the stock is trading at an EV/Sales multiple of 18.9x, higher than the industry median (Healthcare) of 11.6x. As per ASX, the stock of LBT gave a return of 15.38% in the past six months but a negative return of 18.92% in the last one month. Considering the current trading levels, softer market conditions due to the global pandemic and its impact on sales and marketing activities, we suggest investors to keep an eye on the stock and hence, give a watch stance on the stock at the current market price of $0.145, down by 3.33% on 13 August 2020.

HSC Technology Group Limited

HSC partners with Harvey Norman Commercial Division NSW: HSC Technology Group Limited (ASX: HSC) is engaged in the development and integration of an assistive technology IOT platform for the aged care and disability sectors. As on 13 August 2020, the market capitalization of the company stood at ~$18.43 million. The company has recently announced that it has entered into a reseller agreement with the Commercial Division of Harvey Norman -NSW, for its HSC Care and HSC Home solutions. This agreement will result in widely accessible solutions to HVN’s clients and will expand HSC’s National Disability sector footprint via existing Harvey Norman contracts.

Quarterly Performance: During the quarter ended June 2020, the company received cash receipts of $920k from sales of assistive technology to enterprise customers and $900k of sales orders. The Company has over 2,700 active commercial subscriptions in Australia and New Zealand and is focused on delivery of its sales strategy and customer projects. The company also secured a tender to provide Nurse Call Systems in South Australia for Aged Care & Housing Group Inc.

Quarterly Cash Flow Activities (Source: Company Reports)

Key Risks: The Group's activities expose it to a variety of financial risks, including market risk (including currency risk, interest rate risk and price risk), credit risk and liquidity risk.

Stock Recommendation: The company is working on expanding its revenue base by actively targeting additional reseller partners and new customers, with the addition of complementary products to its solution mix and looking at ways to increase its profit margins. On a Trailing Twelve Month basis (TTM), the stock is trading at an EV/Sales multiple of 15.3x, higher than the industry median (Technology) of 5.8x. As per ASX, the stock of HSC gave a return of 83.33% in the past six months and a return of 120% in the last one month. The stock of HSC is trading above its 52-week average levels. Considering the current trading levels, low market capitalization, and key risks, we suggest investors to keep an eye on the business activities and hence, have a watch stance on the stock at the current market price of $0.013, up by 18.182% on 13 August 2020.

Golden Deeps Limited

Capital Raising to Fast Track Gold Exploration: Golden Deeps Limited (ASX: GED) is engaged in the exploration of mineral deposits. As on 13 August 2020, the market capitalization of the company stood at ~$5.96 million. The company has recently announced that it is planning to raise $2,346,000 via a placement, wherein it will issue 187,680,000 fully paid ordinary shares and free attaching options at an issue price of $0.0125 per share. These proceeds will enable the company to accelerate exploration of the recently acquired, highly prospective and historically underexplored gold projects in the Lachlan Fold Belt in NSW.

Quarterly Activities: During the quarter ended 30 June 2020, the company acquired two gold projects in the Lachlan Fold Belt, NSW, through the acquisition of 100% of Extract Minerals Pty Ltd. Despite the market volatility, the company is showing signs of improvement and is progressing strategic activities and is maintaining its tenements in Canada’s historical Cobalt belt. During the quarter, the company made significant operating cost reductions and reported a cash balance of $669K. In the same time span, it used $85 million of cash in operating activities.

Cash Used in Operating Activities (Source: Company Reports)

Key Risks: The company is exposed to a variety of risks including, risks relating to additional funding requirements, metal prices, exploration, development and operating risks, competition, production risks, regulatory restrictions, including environmental regulation and liability and potential title disputes.

Stock Recommendation: As per ASX, the stock of GED is moving towards its 52-week high of $0.032. It gave a return of 88.89% in the past three months and a return of 70% in the last one month. On a Trailing Twelve Months basis (TTM), the stock is trading at a price to book value multiple of 2.3x, higher than the industry median (Basic Materials) of 2.1x. Considering the current trading levels, returns in the past three months, low market capitalization and softer market conditions due to the COVID-19 pandemic and higher P/BV value multiple, we suggest investors to keep an eye on the business activities and have a watch stance on the stock at the current market price of $0.019, up by 11.765% on 13 August 2020.

Comparative Price Chart (Source: Thomson Reuters)

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