Stocks’ Details

Shriro Holdings Limited

Decent Growth in Bottom-Line: Shriro Holdings Limited (ASX: SHM) is engaged in the marketing and distribution of kitchen appliances and consumer goods. The market capitalisation of the company stood at $67.51 Mn as on 6^th October 2020. Recently, the company notified about the change of financial year from 31 December to 30 June. However, the FY20 would end on 31 December 2020. For the half-year ended 30^th June 2020, the company reported sales revenue amounting to $78.6 million as compared to $80.0 million in 1H FY19. The company’s diversified product, distribution channels and geographic mix supported the company’s sales revenue from the impact of COVID-19 related retail shutdown. In addition, the company witnessed a rise of 64.6% in export revenue. NPAT for the period amounted to $4.7 million, reflecting a rise of 74.1% over pcp.

Key Financials (Source: Company Reports)

Outlook: The company is optimistic about the strength of its products in spite of economic uncertainty. This allows SHM to maintain focus on building brands that will succeed in the future.

Stock Recommendation: As a result of rising profits and a cautious approach to inventory ordering, the company experienced a rise of $6.4 million in operating cash flows to $19.0 million. SHM closed the half-year with a cash balance of $19.7 million and nil borrowings. SHM has an EV to sales multiple of 0.4x as compared to the industry median (Consumer Cyclicals) of 1.5x on TTM basis. In addition, the stock is trading at a P/E multiple of 7.98x against the industry median (Consumer Cyclicals) of 10.1x on TTM basis. The 52-week low-high range for the stock stands at $0.390-$0.760, respectively. On a technical analysis front, the stock price of SHM has a support level of ~$0.671 and a resistance level of ~$0.789. Hence, in light of the growth in bottom-line, increasing operating cash flows, valuation and key risks, we give a “Speculative Buy” recommendation on the stock at the current market price of $0.740 per share, up by 4.225% on 6^th October 2020.

Fintech Chain Limited

Consistent Demand for Products: Fintech Chain Limited (ASX: FTC) is engaged in the provisioning of online and offline transaction authentications. The market capitalisation of the company stood at ~$51.41 Mn as on 6^th October 2020. For the quarter ended June 2020 (Q1 FY21), FTC noted negative cash flow because of the impact of the COVID-19 epidemic. The company experienced a consistent demand for its T-Linx^TM deployment from bank customers. FTC added that T-Linx^TM continues to support bank customers in growing their businesses.

For the year ended 31^st March 2020, the company reported revenue amounting to RMB35,63 million as compared to RMB44,18 million in FY19. Despite the COVID-19 pandemic, the company witnessed a rise of 36% in net profit and total comprehensive income to RMB3.9 million in FY20.

Financial Summary (Source: Company Reports)

Outlook: Going forward, the company is focused on growing its overall banking market share in Greater China and overseas. The company would continue to enhance its T-Linx^TM related products and services.

Stock Recommendation: The stock of FTC has corrected by 1.25% and 8.14% in the past one and three months, respectively. As a result, the stock is inclined towards its 52-week low of $0.061, offering decent opportunities for accumulation. FTC has an EV/Sales multiple of 7.7x as compared to the industry average (Investment Banking & Investment Services) of 12.6x on TTM basis. On a technical analysis front, the stock has a support level of ~$0.067 and a resistance level of ~$0.106.  Hence, considering the consistent demand for its products in Q1 FY21, growth in bottom-line and key risks, we give a “Speculative Buy” recommendation on the stock at the current market price of $0.077 per share, down by 2.532% on 6^th October 2020.

BrainChip Holdings Ltd

Expansion of Business in India: BrainChip Holdings Ltd (ASX: BRN) is engaged in the development of software and hardware-accelerated solutions for advanced artificial intelligence (AI) and machine learning applications. The market capitalisation of the company stood at ~$524.48 Mn as on 6^th October 2020. Recently, the company announced the establishment of Software Development Center in Hyderabad, India, which would be focused on software and firmware development in order to support the Akida^TM Neuromorphic System-on-Chip (NSoC). Previously, the company has also been added to S&P/ASX All Technology Index, which became effective on 21^st September 2020.

1HFY20 Key Highlights: The company generates its revenue from BrainChip Inc., in the USA, and France based subsidiary BrainChip SAS. During the half-year ending 30 June 2020, BRN recorded revenue amounting to US$13,397 as compared to US$66,635 in 1H FY19. During the half-year, BRN witnessed a rise of 36% in total expenses to US$6,212,777.

Key Financials (Source: Company Reports)

Growth Opportunities: Going forward, BRN expects growth opportunities in evolving markets of Smart Sensors, Smart Homes and Smart Healthcare.

Stock Recommendation: The company signed a Put Option Agreement with LDA Capital Limited and LDA Capital LLC (LDA Capital) in the month of August 2020, wherein the company would receive equity capital of A$29 million in the upcoming 12 months. On a technical analysis front, the stock price of BRN has a support level of ~$0.301 and a resistance level of ~$0.428. Thus, considering the recent establishment of software development center in India, growth opportunities in evolving markets and financing facilities, we give a “Hold” recommendation on the stock at the current market price of $0.350 per share, up bsy 6.061% on 6^th October 2020.

Comparative Price Chart (Refinitiv, Thomson Reuters)

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