Freelancer Limited 

FLN Details

Acquired Freight Marketplace Loadshift: Freelancer Limited (ASX: FLN) is engaged in the provision of freelancing and crowdsourcing marketplace. The company connects employers and freelancers globally from over 247 countries, regions, and territories. FLN has announced recently regarding the acquisition of Loadshift through its subsidiary Freightlancer. Loadshift is one of the largest heavy haulage freight marketplaces, with ~85.8mn kms of freight requested in 2020. The subsidiary has received a $3.7mn investment from Wes Maas of Maas Group Holdings. 

1QFY21 Activities: FLN has registered a Gross Payment Volume (GPV) at a record of $249.7mn in 1QFY21 (up by 39% on pcp). The company has registered a Gross Marketplace Volume (GMV) of $33.6mn (up by 23.6% on pcp) during the similar period. The company has seen an increase in cash receipts to $15.6mn (up by 32.1% on pcp) in 1QFY21. Moreover, the company has reported a positive net operating cash flow of $4.2mn in 1QFY21. In addition, the company has reported a cash balance of $37.8mn as on 31 March 2021. 

FY20 Financial Highlights: The company has reported an increase in revenue to $58.77mn in FY20 against $57.91mn in FY19. The company has incurred a loss of $0.64mn in FY20 due to higher finance costs. FLN has seen an increase in its cash balance to $34.34mn as on 31 December 2020 against $32.01mn as on 31 December 2019.

Revenue growth (Source: Analysis by Kalkine Group)

Key Risks: The company is exposed to foreign exchange prices. Thus, any adverse movement in foreign exchange prices may impact the financials of the company. In addition, the company is exposed to credit risk. Therefore, any default on payments from counterparties on their contractual obligation may impact the financials of the company. 

Outlook: The company expect to see a rising number of an average completed project as the FY21 progress further. The company has so far reported US$187 of average completed project in FY21. The company is likely to activate Freelancer features for mobile web, iOS, and android by the end of 2QFY21.

Stock Recommendation: The stock of FLN gave return of ~-0.94% in the last one month and a return of ~114.28% in the last three months. The current market capitalisation of FLN stands at ~$464.79mn as of 9 June 2021. The stock is currently trading above the average 52-weeks’ price level range of ~$0.400~$1.155. On the technical analysis front, the stock has a support level of ~$0.995 and a resistance of ~$1.137. On a TTM basis, the stock of FLN is trading at an EV/Sales multiple of 8.0x, higher than the industry (Professional & Commercial Services) median of 2.9x, thus seems over-valued. Considering the company has incurred a loss in FY20 despite increase in revenues, associated business risks, steep price movement in past few months, current trading levels, and valuation on TTM basis, we give a “Sell” rating on the stock at the current market price of $1.075, up by ~4.878% (as on June 09, 2021, 02.25 PM (GMT+10), Sydney, Eastern Australia).

FLN Daily Technical Chart, Data Source: REFINITIV 

Intega Group Limited 

ITG Details

Alternate Director Appointed: Intega Group Limited (ASX: ITG) is engaged in quality, testing and measurement businesses in Australia. Its offered services include construction materials testing (CMT), subsurface utility engineering (SUE), owners’ representative services, environmental testing, geotechnical engineering, geomechanical testing and quality assurance (QA) services. ITG has informed the market on 2 June 2021 regarding the appointment of an alternate director. Mr Nathanial Thomson has been appointed as an alternate director for Mr Michael Alscher with ITG. The company may terminate the appointment as per ITG’s constitution.

Strategic Review for Enhanced Shareholder’s Value: ITG has announced on 9 June 2021 about commencing a strategic review to increase shareholder’s value. Due to strong pipeline of infrastructure investment in the US and Australia, the company has been performing well. ITG expects a potential organic and inorganic growth, mainly in US markets, to pose for business growth. ITG has informed its shareholders not to take any action in relation to the strategic review. The company continues to update its shareholders on any development regarding the strategic review. 

1HFY21 Financial Highlights: ITG has registered a decline in its revenue to $210.66mn in 1HFY21 against $231.02mn in 1HFY20. The company has registered an increase in profits to $5.58mn in 1HFY21 against $3.60mn in 1HFY20. ITG has seen a decline in its cash balance to $22.56mn in 1HFY21 against $40.02mn as on 30 June 2020.

Revenue Trend (Source: Analysis by Kalkine Group)

Key Risks: The company is exposed to foreign exchange prices. Thus, any adverse movement in foreign exchange prices may impact the financials of the company. In addition, the company holds interest-bearing liabilities. Therefore, any severe change in interest rates may impact the financials of the company. 

Outlook: The company is likely to review its strategy to create shareholders value in near future. The company continues to focus on employee and community safety after a pandemic situation witnessed last year.

Stock Recommendation: The stock of ITG gave a return of ~9.89% in the last one month and a return of ~72.41% in the last three months. The current market capitalisation of ITG stands at ~$192.42mn as of 9 June 2021. The stock is currently trading above the average 52-weeks’ price level range of ~$0.160~$0.535. On the technical analysis front, the stock has a support level of ~$0.476 and a resistance of ~$0.534. On a TTM basis, the stock of ITG is trading at an EV/EBITDA multiple of 6.4x, higher than the industry (Construction & Engineering) average of 3.7x, thus seems over-valued. Considering the company has registered a decline in its top line in 1HFY21, associated business risks, volatile price movement in the past months, current trading levels, and valuation on TTM basis, we suggest investors to book profits and give a “Sell” rating on the stock at the current market price of $0.52, up by ~13.04% (as on June 09, 2021, 11.05 AM (GMT+10), Sydney, Eastern Australia).

ITG Daily Technical Chart, Data Source: REFINITIV 

Aeris Environmental Ltd. 

AEI Details

3QFY21 Key Update: Aeris Environmental Ltd. (ASX: AEI) develops, manufactures and markets environmentally friendly technology solutions. The company is primarily engaged in research, development, commercialisation of technologies, global distribution of the AerisGuard range of products, and provision of heating, ventilation, air conditioning and refrigeration (HVAC/R) hygiene. AEI has reported a revenue of $1.04mn in 3QFY21, impacted by lockdown for global markets. The company has posted cash receipts to the value of $1.90mn in 3QFY21. The company has announced regarding working closely with the distributors in the US for sales growth of its core heating, ventilation, and air-conditioning (HVAC) hygiene and maintenance range. 

1HFY21 Financial Highlights: The company has registered an increase in revenue to $5.20mn in 1HFY21 against $3.26mn in 1HFY20. However, the sales were affected due to Covid-19 lockdowns and winters in the Northern Hemisphere. The company has incurred a loss to $1.76mn in 1HFY21. AEI has registered an increase in its cash balance to $13.58mn as on 31 December 2020 against $12.94mn as on 30 June 2020.

Revenue growth (Source: Analysis by Kalkine Group)

Key Risks: The company is exposed to foreign exchange prices. Thus, any adverse movement in foreign exchange prices may impact the financials of the company. In addition, the company utilises technology to run its business efficiently. Therefore, an obsolete technology may impact the business of the company. 

Outlook: The company is in process to commence operations in China through its wholly-owned foreign entity. AEI expects establishment of its foreign entity in China is likely to accelerate commercialization of the company’s products. The company has received regulatory approvals in several regions and expected to get the approvals for pending key markets, including Australia.

Stock Recommendation: The stock of AEI gave a return of ~-12.82% in the last one month and a return of ~-27.65% in the last three months. The current market capitalisation of AEI stands at ~$41.45mn as of 9 June 2021. The stock is currently trading below the average 52-weeks’ price level range of ~$0.140~$0.735. On a TTM basis, the stock of AEI is trading at an EV/Sales multiple of 1.8x, lower than the industry (Professional & Commercial Services) median of 2.9x, thus seems under-valued. Considering the company has registered an increase in revenues in 1HFY21, focusing on sales growth in the US for its HVAC related product, receiving regulatory approvals for its products in various regions, associated business risks, and valuation on TTM basis, we recommend a “Speculative Buy” rating on the stock at the current market price of $0.17, as on 9 June 2021.

AEI 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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