Kina Securities Limited

KSL Details

Kina Securities Limited (ASX: KSL) operates as a diversified financial services company. KSL is based out of Papua New Guinea and provides share brokerage, fund administration, investment management services, and other services.

Result Performance (H1FY21 Ended 30 June 2021)

• Fees and Commissions rose 10% against the PCP to PGK 40.4 Mn mainly via continued development of the channel network. The organic growth as well as digital expansion led to the increment of 66% in the digital as well as channel fees against PCP.
• Net interest income was up by 6% to PGK 85.4 million on previous corresponding period (pcp).
• Non-interest income was up by 2% on PCP to PGK 70.3 million.
• NPAT witnessed an increase of 36% to reach PGK 39.8 million compared to PcP.
• The Board of Directors declared an interim dividend of AUD 3.00 cents per share or PGK 8.25 toea per share.

Key Data (Source: Company Reports)

Recent Update:

• On 22 September 2021, the company informed the market that Kina and Westpac Banking Corporation (Westpac) have mutually agreed to terminate the agreements for the purchase by Kina of Westpac’s Pacific businesses, comprising Westpac Fiji and Westpac's 89.91% stake in Westpac Bank PNG Limited (Acquisition). Considering the costs incurred in the transaction and the expected revenue from the Acquisition now not occurring, the company expects that its full year 2021 results will now be in line with its full year 2020 results.

Outlook:

The company has developed as well as commenced roll out a comprehensive banking packaged for SMEs for transaction services, lending, digital banking, and digital partnerships. The company stated that the ongoing expansion of the market leading eftpos fleet would be meeting robust demand.

Key Risks: 

KSL is exposed to foreign currency fluctuations as it derives revenues from FX transactions. Change in interest rates by the Reserve Bank of Australia will impact Net Interest Margin and loan growth.

Technical Overview:

Chart:

Source: REFINITIV

Note: Purple Color Line Reflects RSI (14-Period)

Stock Recommendation: 

The stock rose by 18.4% in the time frame of 1 year. It has made a 52-week low and high of $0.715 and $1.200, respectively. The stock is currently trading towards the 52-week lower levels.

Considering the aforesaid facts, and current trading levels, we give a “Buy” recommendation on the stock at the current market price of $0.885 per share (Time: 10:58 AM (GMT +10), Sydney, Australia) on 23^rd September 2021.

OpenLearning Limited

OLL Details

OpenLearning Limited (ASX: OLL) is primarily engaged in providing the cloud-hosted social learning platform for delivering the short courses, blended learning as well as online degrees.

Result Performance (H1FY21 Ended 30 June 2021)

• Revenue for the period stood at $1.31 million, an increase of 30.4% YoY. Platform revenue increased by 120% YoY to $1.135 million. Program delivery segment began generating revenue with the successfully commencement of UNSW Transition Program Online (TPO) in March 2021.
• Gross sales for the interim period stood at $1.76 million, an increase of 16.6% YoY.
• There were no dividends paid, recommended or declared during the current or previous financial half-year.

Key Data (Source: Company Reports)

Outlook:

As per the reports, the company’s growth strategy is now in place, cementing its position as a leading lifelong learning platform in Australia and Southeast Asia. Its focus is on the Platform Subscription and Program Delivery offerings. It has New SaaS agreements signed with Afterpay and the University of Wollongong. In August, five more universities in the U.K. and New Zealand announced they will accept students from the TPO.

Risks:

The company is susceptible to certain risks such as credit risk, foreign currency risk, liquidity risk and interest rate risk.

Technical Overview:

Chart:

Source: REFINITIV

Note: Purple Color Line Reflects RSI (14-Period)

Valuation Methodology: EV/Sales Based Relative Valuation (Illustrative)

Stock Recommendation: 

The stock has witnessed a decline of ~26.66% in the time frame of 1 month. The company stated that new program targeting technology up-skilling is under development and will commence on 18^th October 2021.

The stock has been valued using EV/Sales multiple-based illustrative relative valuation and the target price so arrived reflects a rise of low double-digit (in % terms). A slight premium has been applied to EV/Sales Multiple (NTM) (Peer Average) considering rise in the revenue from ordinary activities in H1 FY 2021 on the YoY basis as well as decent outlook.

Considering the aforesaid facts, and current trading levels, we give a “Speculative Buy” recommendation on the stock at the current market price of $0.110 per share, down by 4.348% on 23^rd September 2021.

Note 1: The reference data in this report has been partly sourced from REFINITIV.

Note 2: Investment decisions should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the analysis has been achieved and subject to the factors discussed above alongside support levels provided.

Technical Indicators Defined:-

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices

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