Stocks’ Details 

RMA Global Limited  

Change of Interest of Substantial Holder: RMA Global Limited (ASX: RMY) provides online real estate review, rating, and property's statistical information. The company is primarily focused on making real estate properties more engaging and accessible for customers. RMY has announced on 21 June 2021 regarding the change of interest of substantial holders. Accordingly, EFM Global Growth Fund has increased its voting power to 7.68% from 6.67% on 18 June 2021. 

Robust Growth in Agents, Reviews and Subscription:  RMY has reported that it now has more than 122,000 agents on the US platform. The company has reported its reviews more than agents to 128,500, indicating higher agent interaction with the platform. RMY started monetising its agent database to focus on subscriptions. 

3QFY21 Business Highlights: RMY has seen an increase of 59% YoY in recurring revenue to $2.97mn in 3QFY21. Similarly, net receipts from customers increased by 59% YoY to $3.66mn in the same period. In addition, the company has registered an increase of 148% (115,000) and 363% (109,800) YoY in the US agents and reviews, respectively in the same period.  

1HFY21 Financial Highlights: RMY has reported increasing total revenue to $4.76mn in 1HFY21 against $3.47mn in 1HFY20. The company has incurred a loss of $4.16mn in 1HFY21 due to higher operating costs. The cash balance has been improved significantly to $13.84mn as on 31 December 2020 against $3.99mn as on 30 June 2020. Total Liabilities have been increased to $3.54mn as on 31 December 2020 against $2.76mn as on 30 June 2020.

Revenue trend (Source: Analysis by Kalkine Group)

Key Risks: The company is exposed to Covid-19 related risks. Therefore, any such situation may impact the business. In addition, the company is exposed to credit risk. Therefore, the company requires sufficient liquidity to repay its loan.  

Outlook: RMY has a target to reach 200,000 agents on its platform by the end of CY2021, indicating an increase in revenue going forward. The company has launched additional promotional products and expects a continued business growth.

Valuation Methodology: EV/Sales based Relative Valuation Method (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 RMY gave a return of ~28.26% in the last one month and a return of ~31.11% in the last nine months. The current market capitalisation of RMY stands at ~$141.41mn as of 05 July 2021. The stock is currently trading below the average 52-weeks’ price level range of ~$0.215-~$385. On the technical analysis front, the stock has a support level of ~$0.27 and a resistance of ~$0.32. We have valued the stock using an EV/Sales multiple-based illustrative relative valuation method and arrived at a target price with a correction of low single-digit (in % terms). We believe that the company can trade at some discount as compared to its peer median, considering the company has incurred a loss and witnessed increase in total liabilities in 1HFY21. For this purpose, we have taken peers Domain Holdings Australia Ltd (ASX: DHG), Seek Ltd (ASX: SEK), Rent.com.au Ltd (ASX: RNT). Considering the decent return in the last one-month, key risks associated with the business, and valuation, we suggest investors to book profits and recommend a “Sell” rating on the stock at the current market price of $0.295, as on Jul 5, 2021.

RMY Daily Technical Chart, Data Source: REFINITIV 

5G Networks Limited 

Partial Loan Settlement: 5G Networks Limited (ASX: 5GN) is a provider of Internet broadband and cloud infrastructure services to mid-market corporate industries. The company is principally engaged in providing high speed broadband, cloud-based solutions, managed services, and network infrastructure services. 5GN has informed the markets that Webcentral Group Limited (WCG) has repaid $15mn of the loan to 5GN. WCG still owns $26mn of loan taken from 5GN. 5GN is expected to utilise the funds for any acquisition opportunity. 

Operational Updates: 5GN has launched the wholesale automated service fulfilment portal in early May 2021. The company is progressing with 13 Data centres online with a completion of Integrid integration. During 3QFY21, rent reductions of $5.5mn has been witnessed with a scope of further improvements on excess capacity in Melbourne. 

1HFY21 Financial Highlights: 5GN has reported an increase in revenue to $37.25mn in 1HFY21 against $25.36mn in 1HFY20. Despite an increase in revenue, the company has incurred a loss of $2.25mn in 1HFY21 due to higher operating costs. The cash balance has been declined to $8.26mn as on 31 December 2020 against $22.11mn as on 30 June 2020.  Total Liabilities have been increased significantly to $98.38mn as on 31 December 2020 against $32.11mn as on 30 June 2020.

Revenue trend (Source: Analysis by Kalkine Group)

Key Risks: The company requires technology to operate its business efficiently. Therefore, obsolete technology may impact the business of the company. In addition, the company is exposed to foreign exchange prices. Therefore, adverse foreign exchange prices may impact the financials of the company.  

Outlook: 5GN continues to expect a margin growth on the back of consolidation of cloud, DC, and network services within the company’s infrastructure. 5GN targets ~80 data centres online by the end of CY2021. The company is likely to utilise its funds for strategic acquisition for the business growth.

Valuation Methodology: P/E based Relative Valuation Method (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 5GN gave a return of ~-19.5% in the last three months and a return of ~-34.3% in the last six months. The current market capitalisation of 5GN stands at ~$110.26mn as of 05 July 2021. The stock is currently trading below the average 52-weeks’ price level range of ~$0.85-~$2.44. We have valued the stock using the P/E multiple-based illustrative relative valuation method and arrived at a target price of low double-digit upside (in % terms). We believe that the company can trade at a slight premium as compared to its peer median, considering an increase in revenue and other income in 1HFY21. For this purpose, we have taken peers Vocus Group Ltd (ASX: VOC), Uniti Group Ltd (ASX: UWL), TPG Telecom Ltd (ASX: TPG) to name a few. Considering the company has partially received loan amount given to WCG, utilising funds for acquisition opportunities, current trading levels, key risks associated with the business, and valuation, we recommend a “Speculative Buy” rating on the stock at the current market price of $0.935, as on July 5, 2021, 12.31 PM (GMT+10), Sydney, Eastern Australia).

5GN Daily Technical Chart, Data Source: REFINITIV

PlaySide Studios Limited 

Agreement to Develop Mobile Video Game: PlaySide Studios Limited (ASX: PLY) develops games within the hyper-casual, casual and core gaming categories. Its business lines include Original intellectual property (IP), Brands and Licensing, and Partnerships. PLY has entered into a license agreement with Paramount Pictures to develop a mobile video game “The Godfather”. The license agreement is the second agreement with a top five Hollywood movie studio this year. It also provides multi-year profit sharing across IOS and android devices. 

3QFY21 Business Activities: PLY has reported an increase of 71% YoY in 3QFY21 to $2.73mn (unaudited), resulting in 66% YoY increase in YTD FY21 (unaudited) to $7.76mn. The company has surpassed 9.3mn downloads for Animal Warfare, the highest downloaded Original IP game in the company’s history. PLY has witnessed a decline in its cash reserves to $13.33mn, down by $2.74mn during 3QFY21. 

1HFY21 Financial Highlights: PLY has registered an increase in revenue to $5.02mn in 1HFY21 against $3.07mn in 1HFY20 mainly from Playside Original IP revenue driven by the success of Animal Warfare mobile game. Despite increase in revenue, the company has incurred a loss of $2.05mn in 1HFY21 due to higher operating cost. The cash balance has been improved to $16.07mn as on 31 December 2020 against $0.52mn as on 30 June 2020. The total liabilities have been increased to $2.94mn as on 31 December 2020 against $1.87mn as on 30 June 2020.

Revenue trend (Source: Analysis by Kalkine Group)

Key Risks: The company requires updated technology to operate the business efficiently. Therefore, obsolete technology may impact the business of the company. In addition, the company is exposed to foreign exchange prices. Therefore, adverse foreign exchange prices may impact the financials of the company.  

Outlook: PLY has signed an agreement with Click Management to develop major PC gaming and Lazar Beam and Fresh to launch in FY22. The company is investing in the US market heavily to expand its international presence. 

Stock Recommendation: The stock of PLY gave a return of ~-26.3% in the last three months and a return of ~-36.3% in the last six months. The current market capitalisation of PLY stands at ~$104.46mn as of 05 July 2021. The stock is currently trading below the average 52-weeks’ price level range of ~$0.255-~$0.49. On a TTM basis, the stock of PLY is trading at an EV/Sales multiple of 2.0x lower than the industry (Software & IT Services) median of 6.1x, thus seems under-valued. Considering an increase in revenues in 1HFY21, increase in cash balance as on 31 December 2020, agreement with leading players in Media and Entertainment, current trading levels, key risks associated with the business, and valuation on TTM basis, we recommend a “Speculative Buy” rating on the stock at the current market price of $0.28, as on July 5, 2021, 12.30 PM (GMT+10), Sydney, Eastern Australia).

PLY 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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