Netlinkz Limited
NET Details
Partnership with LNS International: Netlinkz Limited (ASX: NET) is a provider of safe cloud network solutions to organisations. It has developed Netlinkz- a virtual secure network (VSN) technology platform to provide connectivity solutions to healthcare, manufacturing, and resources & utilities sectors. As on 25th January 2021, the market capitalisation of the company stood at ~$124.40 million. In a recent announcement on 29th December 2021, the company informed investors of redemption of 4.51 million of convertible notes at face value of $4.51 million. This redemption was a major portion of remaining conversion from the available facility and mostly funded by the proceeds from a recent placement of securities notified on 22 December 2020 and 17 December 2020. In another key update, NET informed about entering a major partnership with LNS International for the delivery and distribution of complete solutions in Japanese and Asian geographies. Together the companies are participating in tenders worth $600 million. NET is targeting at a sales deal of $15 million for first year through a mix of Government tenders in the ASEAN region, new business and existing LNS business.
Q1FY21 Result Highlights: During September 2020 quarter, the company received $5.8 million cash from the customers, up by 89% on June 2020. This was due to growth in revenue primarily from China business supported by a major customer from SSI Pacific Pty Limited. During the quarter, the company began to market the VSN 2.0 worldwide, launched s new website, and signed new contracts with partners for a host of new services. The company reported cash reserve balance of $2.5 million as on 30 September 2020.
Cash Receipts from Customers, Q1FY20-Q1FY21 (Source: Company Reports)
Outlook: Looking ahead, the company is focused on expanding its sales and distribution. For CY2020, receipts from customers to be around $15 million.
Stock Recommendation: The stock of NET gave a negative return of 36.36% in the past three months and a negative return of 15.15% in the past six months. The stock is currently inclined towards its 52-week low level of $0.035. The stock of NET has a support level of ~$0.035 and a resistance level of ~$0.066. Considering the low trading levels, decent results of Q1FY21 and FY20, new partnerships and contracts, decent outlook for FY21, we give a ‘Speculative Buy’ recommendation on the stock at the current market price of $0.049, down by 2.001% on 25th January 2021.
NET Daily Technical Chart (Source: Refinitiv, Thomson Reuters)
ResApp Health Limited
RAP Details
Launch of SleepCheck: Resapp Health Limited (ASX: RAP) is a health technology developer of smartphones applications for the detection and management of respiratory infections. ResAppDx and SleepCheck are its 2 key products currently being developed and marketed. As on 25th January 2021, the market capitalisation of the company stood at ~$59.89 million. On 12th January 2021, the company announced the issue of 2.5 million unlisted options expiring on 12thJanuary 2026 under an Employee Incentive Plan. The company recently announced appointment of Mr. Mike Connell as the VP, Commercial for ResApp. He will be accountable for RAP’s global commercial operations. During December 2020, the company announced the roll-out of SleepCheck, an app for detecting sleep apnoea on selected Android devices. It is currently launched on Samsung Galaxy S9, S9+, S10, S10+ and S20 mobiles across 36 countries. Currently, the app has 3,946 downloads till the close of Q2FY21. Recently, the company also entered into an agreement with AstraZeneca for providing its cough identification algorithms via a new application for a clinical study on lung cancer patients.
September 2020 Quarter Results: During the quarter, the company progressed its several partnerships with telehealth providers for integration of ResAppDx into the partner’s telehealth application such as with Coviu, Phenix Health, Health Engine (non-exclusive marketing contract for 1 year), and Workplace Medicine Australia (WMA). The company held a cash balance of $5.8 million at the end of Q1FY21.
Q1FY20 Cash Flow from Operations (Source: Company Reports)
Valuation Methodology: EV/Sales Multiple Based Relative Valuation (Illustrative)
EV/Sales Multiple Based Relative Valuation (Source: Refinitiv, Thomson Reuters)
Note: All forecasted figures and peers have been taken from Thomson Reuters, NTM-Next Twelve Months
Outlook: The company plans to roll out SleepCheck progressively on more devices in the short term. For ResAppDx, the company is currently working with Medgate team to integrate the app and undertake a 3-month pilot in early 2021 to advance the uptake of ResAppDx. It is also working with USFDA authorities for launch of REsAppDx in the US in Q3FY21.
Stock Recommendation: The stock of RAP gave a negative return of 29.09% in the past three months and a negative return of 42.22% in the past six months. The stock is currently inclined towards its 52-weeks’ low level of $0.055. The stock of RAP has a support level of ~$0.065 and a resistance level of ~$0.106. We have valued the stock using Enterprise Value to Sales multiple based illustrative relative valuation method and have arrived at a target price of low double-digit upside (in % terms). For the purpose, we have taken peers like PKS Holdings Limited (ASX: PKS), Volpara Health Technologies Limited (ASX: VHT), PainChek Limited (ASX: PCK) and others. Considering the current trading levels, decent results of Q1FY21, business update, and outlook for FY21, new partnerships and growth of downloads of SleepCheck, and valuation, we give a ‘Speculative Buy’ recommendation on the stock at the current market price of $0.078, down by 1.266% on 25th January 2021.
RAP Daily Technical Chart (Source: Refinitiv, Thomson Reuters)
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