YOJEE Limited

YOJ Details

YOJEE Limited (ASX: YOJ) is a cloud-based software as a service (SaaS) logistics platform which manages freight movements providing end to end connectivity and control in the Asia-Pacific region. Yojee is based out of Subiaco, Australia and it serves third-party logistics providers, and logistics companies.

Expansion in Philippines: YOJ secured an expansion order from its global enterprise customer in Philippines, providing end-to-end solutions for e-commerce operations. YOJ charges monthly subscription fees and variable fees. The 3-year contract materializes the long-tem objective of YOJ to gain scalability in the logistic supply chain space catering to APAC regions.

Financial Highlights of Q3FY21: For the period ending 31st March 2021, the company’s cash receipts grew to 42% from $235,000 in Q2 FY2021 to $332,000 in Q3 FY2021 March. Further, the Y-o-Y cash receipts from customers grew to 174%  out of which the Recurring Revenue (Software) increased by 80%. The expansion order which the company received from the existing global Enterprise Customer operating in the Philippines, moving from the first mile to the first and the last mile, will double the access to volume and revenue-generating transaction. To maintain uninterrupted efficiency, Yojee strengthened its cash position across its book to $19.8 mn as of 31^st March 2021.

Product Sales (Source: Company Report)

Key Risks:

The COVID-19 created supply chain disruptions, which hampered transaction volumes. The trade war going across the globe already disrupted the supply chain and its supporting logistics industry.

Outlook

YOJ intends to expand in the APAC region with enterprise customers. Its platform now caters to Vietnam, Cambodia, and Laos. It plans to expand in Thailand, Singapore and Malaysia through onboarding new customers. The company is collaborating with universities for R&D in tracking locations at a large-scale. On 12^th March 2021, S&P Dow Jones Indices announced the inclusion of the company to its S&P / ASX Indices, which is a positive for the company as it will be widely tracked by investors. Yojee is a part of the industry that comprises 12% of the global GDP, giving it more space to evolve across various Asian regions.

Stock Recommendation:

The stock of YJO gave a returns of ~-30.77% in the last six months and a return of ~-42.55% in the last nine months. The stock is trading below to the average of the 52-week low price of $0.057 and the 52-week high price of $0.290. On a TTM basis, the stock of YJO is trading at an EV/Sales multiple of 165.2x compared to the Industry Median of 45.6 (Software and IT Services), implying overvaluation. On the weekly chart, YOJ stock price broke out the upward sloping trend line support at AUD 0.146 level on June 04, 2021. Since the breakout, prices are sustaining below the rising trend line. Moreover, the prices are trading below the trend-following indicator 21-period SMA and 50-period SMA, indicating a negative trend. The momentum oscillator RSI (14-Period) is trading at ~43.90 levels, indicating bearish momentum. An important support level for the stock, is placed at AUD 0.125, while key resistance level is placed at AUD 0.156. Meanwhile, the company has generated record revenues of $332,000 million for 31^st March  2021 and it remains hopeful of generating higher revenues in the coming quarters. However, considering the low profitability and intensively competitive environment, COVID-19 risks, the current trading levels, and TTM-based valuation, we advise investors to book profit. We give a "Sell" rating on the stock at the current market price of $0.135 as of 24^th June 2021.

YOJ Daily Technical Chart, Data Source: REFINITIV

Note: The purple color line in the chart shows RSI(14-period) and the yellow color line represents trend line. The red color lines indicate 21-period SMA and white color line indicate 50-period SMA.

Megaport Limited

MP1 Details

Megaport Limited (MP1.ASX)  is founded in 2013 and headquartered in Fortitude Valley, Australia. And providing its services across Australia, New Zealand, Hong Kong, Singapore, Japan, North America and Europe. The company is a leading Elastic Interconnection Service provider for connecting secure and on-demand connection between enterprises, networks and services.

Q3 FY21 Update: For the period ending 31 March 2021, the customer's addition went up to 4% on QoQ to 2,117, growth in ports up by 5% along with total services growth clocked to 4% at 20,056 QoQ basis. The launch of Megaport Virtual Edge (MVE) an on-demand vendor-neutral function virtualization (NFV) service that ties with Cisco S-WAN and expected to provide a foundation to the company's channel strategy at a global level.

3QFY21 Balance Sheet Highlights: To facilitate the business operations and strengthen the balance sheet, the company maintained cash of $141.5 million. The company attained cost savings of ~$0.9 million on a QoQ basis bringing down the network operating cash flows from $10.7 million in 2Q FY21 to $8.7 million in 3Q FY 21.

Debt Reduction- the repayment on borrowing was $1.0 million was done from the proceeds of $5.6 million worth of share options exercised by the employees.

Performance Highlight (Source: Company Report)

Key Risks:

MP1 is exposed to foreign exchange risks with revenues from multiple geographies. The company is operating in a niche sector while competing with big players and facing a price war which can impact profitability in the near term.

Outlook:

The various key projects as Megaport Virtual Edge and strategies to structure the Global Sales Leadership are in the pipeline are the key growth drivers for the next three years for Megaport.

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

Stock Recommendation:

MP1 has delivered 1-month and 3-months returns of ~+24.07% and ~+56.82%, respectively. The stock is trading above to the average of the 52-week low price of $10.670 and the 52-week high price of $18.280.

MP1 stock has rallied ~42.15% from a low of AUD 12.86 made on 13 May 2021 to a recent 52-week high of AUD 18.28 tested on 24 June 2021. The prices are hovering around the upward sloping trend line resistance zone at AUD 18.31. However, the prices are trading above the trend-following indicator 21-period SMA and 50-period SMA on the daily chart which is act as a crucial support level. The momentum indicator RSI (14-period) is trading in an overbought zone (~78.03 levels), indicating a possibility of downside correction from the current level. An important support level for the stock, is placed at AUD 16.09, while key resistance level is placed at AUD 18.31.

We have valued the stock using the EV/Sales multiple-based illustrative relative valuation method and arrived at a target price with a correction of low single-digit (in percentage terms). We believe that the stock can trade at a slight discount as compared to its peer median EV/Sales (NTM trading multiple), considering inherit investment risks. We have taken peers like Pointerra Ltd. (ASX: 3DP), Weebit Nano Ltd. (ASX: WBT), Afterpay Ltd. (ASX: APT), to name a few. Considering the low profitability and intensively competitive environment, the current trading levels, valuation, we advise investors to book profits. We give a "Sell" rating on the stock at the current market price of $17.770, up by 0.679% as on Jun 24, 2021.

MP1 Daily Technical Chart, Data Source: REFINITIV 

Note: The purple color line in the chart shows RSI(14-period  and the green color histograms at the bottom of the chart represents volumes. The red color lines indicate 21-period SMA and sky-blue color line indicate 50-period SMA respectively. 

Nutritional Growth Solutions Limited

NGS Details

Nutritional Growth Solutions Limited (NGS.ASX) was incorporated in 2013 and headquartered in Tel Aviv, Israel. It develops, produces, and commercializes its paediatric protein supplements across the US and other countries.

1Q FY21 Update: The sales and marketing expenses, Research and Development expenses, etc were budgeted for the past two quarters US $7.0 million and the real expense came to US $4.05, lower than 40% than originally budgeted.

Expenditure (Source: Company Reports)

Cash Position Highlight: The company acquired the rights to the Healthy Daily Height trademark in China on 9^th April 2021, memorandum of Understanding with Dairy-Based in New Zealand to produce Healthy Height, will be successfully managed since the company strengthened its cash balance to US $3.402 million for 1Q FY 2021 ending 31^st March 2021.

Product Launch: The company launched a clinically proven Nutrition Bar that helps the growth development in children between 3 and 9 years old by 13.8% - 34% in their annual growth. The snack bar market of this category is worth close to US $20 billion in 2018 and the company has an ambitious plan to expand further in this segment.

Key Risks:

Nutritional Growth Solutions Limited, is expanding across the various market and hence it's exposed to currency risk. An increase in US dollar erorded profitability to the extent US $33,000 in FY20.

Outlook:

The company has been expanding by launching new products and expanding across various geographies with a sound cash balance on the books gives a positive outlook for the future.

Stock Recommendation:

NGS has delivered 1-month and 3-months returns of ~-2.63% and ~-26.0%, respectively. The stock is trading below to the average of the 52-week low price of $0.170 and the 52-week high price of $0.380. NGS's prices are trading with the lower bottoms and lower tops formation,  indicating a downward trend for the stock. On the daily chart, the leading indicator RSI (14-period) is trading in negative territory at ~44.33 levels. Prices are also sustaining below the trend-following indicators 21-period SMA and 50-period SMA, further supporting a downside direction. Now an immediate resistance for the stock appears at AUD 0.210 level while support is at AUD 0.170 level. Considering the currency risks, accumulating losses, the current trading levels, we advise investors to book profits. We give a "Sell" rating on the stock at the current market price of $0.185, up by 5.714% as on Jun 24, 2021.

NGS Daily Technical Chart, Data Source: REFINITIV

Note: The yellow color line in the charts represents the trend line while the purple color line shows RSI (14-period). The green color histograms at the bottom of the charts represent volumes. The red and sky blue color lines indicate 21-period SMA and 50-period SMA respectively.

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.

Disclaimer - This report has been issued by Kalkine Pty Limited (ABN 34 154 808 312) (Australian financial services licence number 425376) (“Kalkine”) and prepared by Kalkine and its related bodies corporate authorised to provide general financial product advice. Kalkine.com.au and associated pages are published by Kalkine.

Any advice provided in this report is general advice only and does not take into account your objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your objectives, financial situation and needs before acting upon it.

There may be a Product Disclosure Statement, Information Statement or other offer document for the securities or other financial products referred to in Kalkine reports. You should obtain a copy of the relevant Product Disclosure Statement, Information Statement or offer document and consider the statement or document before making any decision about whether to acquire the security or product.

You should also seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice in this report or on the Kalkine website. Not all investments are appropriate for all people.

The information in this report and on the Kalkine website has been prepared from a wide variety of sources, which Kalkine, to the best of its knowledge and belief, considers accurate. Kalkine has made every effort to ensure the reliability of information contained in its reports, newsletters and websites. All information represents our views at the date of publication and may change without notice.

Kalkine does not guarantee the performance of, or returns on, any investment. To the extent permitted by law, Kalkine excludes all liability for any loss or damage arising from the use of this report, the Kalkine website and any information published on the Kalkine website (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine hereby limits its liability, to the extent permitted by law, to the resupply of services.

Please also read our Terms & Conditions and Financial Services Guide for further information.

On the date of publishing this report (referred to on the Kalkine website), employees and/or associates of Kalkine do not hold interests in any of the securities or other financial products covered on the Kalkine website.