PainChek Limited

PCK Details

Investor Presentation: PainChek Limited (ASX: PCK) is a developer of pain assessment technologies. PCK has developed a smartphone-driven device, PainChek®, to measure pain levels and update the medical record on the cloud. Recently, PCK held an NWR Virtual Investor Conference on 3 August 2021 and the CEO, Mr. Philip Daffas addressed the investors.

June 2021 Quarter Update:

• Growth in RAC Facilities: PCK reported growth of 117% YoY in Residential Aged Care (RAC) facilities and 110% YoY in authorised beds, under the PainChek® licence on 30 June 2021.
• Increase in ARR: PCK posted an increase of 109% YoY in the projected Annualised Recurring Revenue (ARR) from current customers (normalised post-government trial) in Q4FY21 to $5.57 million.
• Robust PainChek Utility: PCK recorded an increase of 253% YoY in the clinical assessments in aged care to more than 479,000 as of 30 June 2021, exhibiting implementation progress within the RAC facilities in Australia.
• Overseas Expansion: The UK market expanded with new clients and implementations driven by COVID-19 vaccinations. In New Zealand, PCK completed the sale and integration with its first RAC partner in Q4FY21.
• Cash Balance: PCK held $11.41 million of cash as of 30 June 2021.

Key Financial Highlights; (Analysis by Kalkine Group)

Key Risks:                                                                                

• Regulatory Risks: The company faces a delay in approvals in launching new products/Apps/ services in new geographies.
• Changes in Consumers’ Spending: PCK faces changes in consumers’ preferences, spending/ income levels due to the COVID-19 crisis, adverse macro-economic conditions, natural calamities, and geopolitical issues.

Outlook:

• PCK has met the US FDA authorities on its pre-submission supplement application and will submit the amended protocol for its trial in Q3CY21. Henceforth, the company will begin clinical trials in Q4CY21.
• The PainChek Infant App has been approved by TGA in Australia and received the European CE Mark in Q2CY21. PCK will now identify the markets sectors in Australia & overseas to commercialize the PainChek Infant App in FY22.

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

Source: Analysis by Kalkine Group

*% Premium/(Discount) is based on our assessment of the company’s NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

Stock Recommendation: The stock of PCK gave a negative return of ~11.47% in the past three months and a negative return of ~22.85% in the past six months. The stock is currently trading close to its 52-week low level of $0.053. The stock has been valued using the Enterprise Value to Sales based illustrative relative valuation method and arrived at a target price of low double-digit upside (in % terms). The company can trade at a slight premium than its peers’ average, considering its increase in ARR, licensed beds and facilities, expansion in the UK and New Zealand, launch plans for the PainChek Infant App in FY22, etc. For the valuation purpose, peers like Adherium Limited (ASX: ADR), Alcidion Group Limited (ASX: ALC), Next Science Limited (ASX: NXS), and others, have been considered. Considering the current trading levels, increase in ARR and licensed RAC facilities in Q4FY21, decent outlook of seeking USFDA clearance and launch plans for PainChek Infant App in FY22, valuation, and associated risks of regulations, change in consumer preferences and spending, we give a ‘Speculative Buy’ rating on the stock at the current market price of $0.054, down by ~1.819%, as on 16 August 2021.

PCK Daily Technical Chart, Data Source: REFINITIV 

Resolution Minerals Limited

RML Details

Drilling Update at the East Pogo Prospect: Resolution Minerals Limited (ASX: RML) is a mining company engaged in explorations and acquisitions to develop precious and battery metal products. On 6 August 2021, RML declared significant intercepts from the assay results of the drilling program completed on the East Pogo gold prospect at the 64North Project in Alaska. RML collected data useful for drilling a deeper target zone of 2000m x 1600m and reported the potential for gold at depth at hole 21EP008 out of the RC drilling of 12 holes undertaken.

Q4FY21 Result Highlights:

• Drilling Completion: In late Q4FY21, RML completed the RC drilling at the East Pogo prospect at the Alaska project and expected results shortly.
• Positive Results from Drilling: The company received positive results from the RAB drilling program at the Sunrise prospect on the West Pogo Block. The drilling exhibited Fort Knox style targets for gold mineralisation across a 280 meters wide corridor. RML also investigated the prospects adjacent to the Sunrise prospect (Tourmaline Ridge) and conducted a field survey in June.
• VTEM Geophysics Survey: Based on a 2,000 line-km airborne survey, RML identified copper in 40 conductors at the Wollogorang Project. Based on the VTEM results’ interpretation, RML will refine the drill targets.
• Earn-In Interest- During the quarter, RML has fulfilled the exploration expenditure condition to earn a 42% interest in the 64North Project, Alaska, before 31 January 2022.
• Agreement with Acuity Capital: RML re-affirmed an At-the-Market (“ATM”) Subscription Contract with Acuity Capital to seek $3 million working capital for two years. The funds will be raised at the company’s election besides any other capital to be raised and directed towards exploration.
• Cash Balance: RML held $1.75 million cash at the bank as of 30 June 2021.

Net Loss after Tax from 1HFY19-1HFY21; (Analysis by Kalkine Group)

Key Risks:

• Weather Constraints: RML faces the risk of adverse climatic conditions, government policies, and delays in planning for the evaluation of mining and drilling.
• Gold Price Volatility: The company faces gold price fluctuations globally, impacting its profits and revenue stream.

Outlook:

• The company plans to re-rank the prospects and finalise the planned activities at the 64North project for the rest of the summer field season.
• RML plans to undertake drilling on the VTEM targets in late August and at the Gregjo Prospect.
• RML intends to complete the historic desktop review at the Benmara Project and includes the final VTEM geophysics survey results to present a project update to the investors in August 2021.

Stock Recommendation: The stock of RML gave a negative return of ~13.04% in the past three months and a negative return of ~39.39% in the past six months. The stock is currently trading lower than the 52-weeks’ average price level band of $0.018 - $0.075. On a TTM basis, the stock of RML is trading at a price to book value multiple of 0.6x, lower than the industry (Metals & Mining) median of 2.8x, thus seems undervalued. Considering the low trading levels, positive results from the drilling at the Sunrise prospect, earn-in-interest in the 64North Project ahead of schedule, trend of nil debt-to-equity multiple, valuation on a TTM basis and associated risks of mining, exploration, and gold price volatility, we give a ‘Speculative Buy’ rating on the stock at the current market price of $0.020, 10:57 AM (GMT+10), Sydney, Eastern Australia, as on 16 August 2021.

RML Daily Technical Chart, Data Source: REFINITIV  

Vortiv Limited

VOR Details

Corporate Governance Disclosure: Vortiv Limited (ASX: VOR) is a technology-based firm investing and collaborating with promising businesses which hold commercialised solutions in the digital, cybersecurity, analytics, and cloud services space. VOR holds 24.89% interest in Transaction Solutions International (TSI) India Private Limited. On 29 July 2021, VOR declared its Corporate Governance Compliance Statement for the financial year that ended on 31 March 2021 and confirmed its accuracy and approval by the Board.

FY21 Result Highlights:

• Sale of DWX & C10 Operations: VOR sold 100% of the share capital of DWX (Decipher Works Pty Limited) and C10 (Cloudten Industries Pty Limited) to CyberCX Pty Limited in December 2020 for $25 million. VOR earned a profit of $9.7 million on the sale and distributed $7.8 million as fully franked dividend and $14.1 million as capital to shareholders.
• TSI India’s FY21 Performance: TSI reported an increase of 4% YoY in total revenue to $48.7 million and an increase of 145% YoY in the profit before tax (PBT) to $1.94 million in FY21. Its Underlying EBITDA increased significantly to $8.7 million, up by 473% YoY in FY21.
• Dividend Payment: VOR declared a fully franked dividend of 5.55 cents per share to the 140.52 million shareholders on 9 April 2021.
• Revenue Growth: VOR posted revenue of $99,000 in FY21 versus $4,000 in FY20.
• Increase in PAT: The company registered a growth in PAT from $2.27 million in FY20 to $10.40 million in FY21.

Cash Highlights; (Analysis by Kalkine Group)

Key Risks:

• Forex Headwinds: The company faces foreign exchange fluctuations due to international operations in India and USD denominated financial instruments.
• Financial Risks: VOR faces interest-rate sensitivity, liquidity, and credit risk on its financial instruments' fair valuation and cash flows.

Outlook: The company is looking to acquire, invest and progress on a transaction or multiple deals at the earliest. The management has drawn up cash flow forecasts and has sufficient cash flows to fulfil the working capital needs and commitments until FY22.

Stock Recommendation: The stock of VOR gave a positive return of ~7.36% in the past six months and a positive return of ~10.52% in the past nine months. The stock is currently trading lower than the 52-weeks’ average price level of $0.037 - $0.310On a TTM basis, the stock of VOR is trading at a price-to-book value multiple of 0.3x, lower than the industry (Software & IT Services) median of 4.7x and thus seems undervalued. Considering the current trading levels, increase in revenue and NPAT, decent performance of the investee company TSI India, well capitalised with sufficient liquidity for FY22, valuation on a TTM basis, and associated financial and regulatory risks, we give a ‘Speculative Buy’ rating on the stock at the current market price of $0.038, down by ~2.565%, as on 16 August 2021.

VOR Daily Technical Chart, Data Source: REFINITIV  

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

Note 2: Investment decision 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 Valuation has been achieved and subject to the factors discussed above.

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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