Urbanise.Com Limited 

UBN Details

3QFY21 Updates: Urbanise.Com Limited (ASX: UBN) is engaged in developing software that enables building operators to automate, streamline, simplify and optimise building operations and performance. UBN has reported an increase in its revenue to $2.85mn in 3QFY21, up by 15.1% on pcp due to an increase in license and professional fees. During 3QFY21, UBN has reported an increase in Strata license fees by 27.4% due to the ongoing PICA implementation. Similarly, an increase of 6.3% on pcp in professional fees of $520k has been seen in 3QFY21. UBN has signed a three-year contract with a large middle east customer to provide integrated Facilities Management (FM) and Strata solution. The company has reported a closing cash balance of $8.76mn as on 31 March 2021 against $4.28mn as on 31 March 2020. 

1HFY21 Financial Highlights: UBN has registered an increase in revenue from contracts with customers to $5.72mn in 1HFY21 against $4.55mn in 1HFY20. The company has incurred a loss of $1.42mn in 1HFY21. UBN has reported a nil debt as on 31 December 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 is engaged in gas exploration. Therefore, any fluctuation in gas prices may affect the financials of the company. 

Outlook: UBN has seen an increasing number of branches roll-out in 3QFY21 across PICA’s NSW portfolio. The company has won a new customer in the middle east, indicating growth in revenue going forward. The company will remain focus on Tier 2 facilities managers and asset owners and building customer pipelines to deliver growth in next 12-18 months.

Stock Recommendation: The stock of UBN gave a return of ~19.48% in the last one month and a return of ~38.88% in the last three months. The current market capitalisation of UBN stands at ~$87.32mn as of 11 June 2021. The stock is currently trading above the average 52-weeks’ price level range of ~$0.87~$1.80. On the technical analysis front, the stock has a support level of ~$1.465 and a resistance of ~$1.726. On a TTM basis, the stock of UBN is trading at an EV/Sales multiple of 6.9x higher than the industry (Software & IT Services) median of 5.9x, thus seems overvalued. Considering the company has incurred a loss in 1HFY21, associated business risks, decent stock price movement in the past few months, and valuation on TTM basis, we suggest investors to book profit and give a “Sell” rating on the stock at the current market price of $1.65, (as on June 11, 2021, 15:01 PM (GMT+10), Sydney, Eastern Australia).

UBN Daily Technical Chart, Data Source: REFINITIV 

Kyckr Limited 

KYK Details

New Contracts Signed: Kyckr Limited (ASX: KYK) is engaged in providing its clients services that require protection against money laundering, terrorism financing and tax fraud. KYK has updated on 14 April 2021 regarding signing new contracts. The company has signed 12 contracts in the calendar year to date with a total value of $788,761. New business wins account for $494,375. Annual Recurring Revenue contracts account for $46,249. Increasing demand from global corporations for the company’s products and services, resulting in winning new contracts.  

3QFY21 Financial Highlights: KYK has reported an increase in total revenue to $645k in 3QFY21 against $587k in 3QFY20. The company has reported a decline in its cash position of $5.7mn as of 31 March 2021 against $7.21mn as of 31 December 2020. KYK has nil long-term debt on its balance sheet as reported on 31 December 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 requires regulatory approvals to operate its business efficiently. Therefore, any delay in regulatory approvals may lead to a business loss for the company. 

Outlook: KYK anticipates a growing trend of Anti-money laundering regulation beyond banking systems, indicating a long-term growth opportunity for the business. On winning contracts amounting to $788,761, KYK forecasts $209k to accrue in the current FY21.

Stock Recommendation: The stock of KYK gave a return of ~-12.72% in the last one month and a return of ~-40.74% in the last three months. The current market capitalisation of KYK stands at ~$17.53mn as of 11 June 2021. The stock is currently trading below the average 52-weeks’ price level range of ~$0.04~$0.099. On a TTM basis, the stock of KYK is trading at a P/BV multiple of 1.1x lower than the industry (Professional & Commercial Services) average of 1.6x, thus seems under-valued. Considering the company has signed a number of new contracts, nil long-term debt on its balance sheet, modest outlook, associated risks with the business and valuation on TTM basis, we recommend a “Speculative Buy” rating on the stock at the current market price of $0.048, down by ~5.883% as on 11 June 2021.

KYK Daily Technical Chart, Data Source: REFINITIV 

References:

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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