Stocks’ Details
 

NEXTDC Limited

 
NXT Appoints Multiplexat S2: NEXTDC Limited (ASX: NXT) is involved in the creation, development and operation of data centre facilities. The market capitalisation of the company stood at $3.66 Bn as on 27April 2020.  Recently, the company stated that it has appointed Multiplex Constructions Pty Ltd as its new principal building contractor at S2, following the dissolution of its prior S2 building contractor, FDC Construction & Fitout (NSW) Pty Ltd. 
 
Share Repurchase Plan Update: In another update, the company announced that eligible NEXTDC shareholders can now apply for up to $30,000 of new fully paid ordinary shares under the SPP. This follows the company’s successful completion of institutional placement through the issue of 86.1 million new shares, which raised funds of around $672 million.

Capital Raising and Uses (Source: Company Reports)
 
Restated FY20 Guidance Amid COVID-19 Crisis: The company had provided an update in which it assured that it has not witnessed any material impact on its sales pipeline owing to the uncertainty arising from COVID-19 crisis. NEXTDC also reiterated its FY20 outlook as per which it anticipates revenue to be in the range of $200 million to $206 million and underlying EBITDA to be between $100 million to $105 million. NXT also restated its capital expenditure outlook of $320 million - $340 million for FY20.
 
Stock Recommendation: The stock of NXT gave positive returns of ~34.6% in the last six months, and 11.73% in the last one month. The stock is currently trading slightly above the average of its 52-week low-high trading range of $5.71 - $10.4.The current ratio of the company stood at 3.42x in 1H FY20 as compared to the industry median of 2.26x. This reflects that NEXTDC is in a decent position to address its short-term obligations against the broader industry.  Gross margin and EBITDA margin of the company stood at 76.6% and 54.1% in 1H FY20, as compared to the industry median of 74.8% and 29.7%. Therefore, considering the decent liquidity position, improved key margins and decent FY20 guidance, we maintain a “Hold” recommendation on the stock at the current market price of $8.38 per share, down 1.179% on 27 April 2020.
 

Tyro Payments Limited

 
COVID-19 Transaction Value Update:Tyro Payments Limited (ASX: TYR) is engaged in offering Australian companies with credit, debit and EFTPOS card acquiring, medicare and private health fund claiming services. The market capitalisation of the company stood at $1.32 Bn as on 27^th April 2020. In a recent update, TYR announced that its transaction value in April FY20 (year-to-date basis) soared 26% year over and came in at $16.381 billion.The transaction values from April to 3 April (date-on-date basis) came in at $0.102 billion, down 23% from FY19. Notably, the TYR’s transaction value has managed more than $11.1 billion in 1HFY20 for > 32,000 Australian merchants.
 

Transaction Value Update (Source: Company Reports)
 
Other Recent Updates:  Recently, the company was selected to participate in the Government’s Coronavirus SME Guarantee Scheme to support SMEs in obtaining access to working capital and to assist them through the impact of COVID-19. As per the Scheme, the Government will assist up to $40 billion of lending to SMEs with turnover of < $50 million by ensuring 50% of new loans issued by participating lenders until 30 September 2020.
 
Withdrawal of Guidance: In view of uncertainty from the spread and duration of the COVID-19 pandemic, together with adverse impact on its merchants’ businesses, the company has recently suspended its guidance for FY20.
 
Stock Recommendation: The stock of TYR has corrected ~30.26% in the last three months, whereas it has run up 147.66% in the last one month. The stock currently trading below the average of its 52-week low-high trading range of $0.97 - $4.53.TYR’s cash balance at the end of February 2020 stood at $154 million, depicting a strong financial position. Additionally, TYR’s capital structure contains no debt. Tyro has EV/ Sales multiple of 5.9x as compared to the industry average (Financial) of 7.8x on TTM basis on TTM basis. Therefore, considering the decent financial position, current trading levels and no corporate debt position, we give a “Buy” recommendation on the stock at the current market price of $2.66 per share, up by 0.377% on 27 April 2020.
 

Nitro Software Limited

 
COVID-19 Update: Nitro Software Limited (ASX: NTO) is a worldwide global document productivity software company, which is engaged in driving digital transformation in organisations across the globe.The market capitalisation of the company stood at A$232.82 Mn as on 27April 2020.  In a recent update, the company stated that given the current uncertainty owing to coronavirus led crisis, it is taking necessary measures to ensure the health and wellbeing of staff, employees and clients amid COVID-19 outbreak.In addition, the company is putting restrictions on travel and encouraging social distancing measures along with work from home facility. The company also stated that it has no material impact on its financial performance due to COVID-19 Pandemic.
 
For 1QFY20, the company’s cash receipts from customers stood at US$9.1 million, up 11% year over year, while net cash outflows from operating activities stood at US$1.8 million in 1QFY20.The company exited the period with cash balance of $40.5 million, with no debt, depicting a robust financial position.  The company is well placed to manage business growth during challenging global conditions related to COVID-19. 
 
 
FY19 Key Financial Highlights: During the period, the company reported total revenues amounting to US$35.7 million, reflecting a rise of 3.3% on last year.This increase was primarily on the back of new customer wins, including large enterprise customers, licence expansions at existing customers, and the continued transition of existing perpetual customers to subscription-based pricing during the year.In FY19, gross profit came in at US$32 million, up 3.4% year over year. Loss for the year stood at US$7.9 million as compared to a loss of US$5.5 million in FY18. 
 

FY19 Key Highlights (Source: Company Reports)
 
Stock Recommendation: The stock of NTO has corrected ~16.89% in the last three months, whereas it has run up 50% in the last one month. The stock currently trading close to the average of its 52-week low-high trading range of A$0.73 - A$1.952.The current ratio of the company stood at 2.08x in FY19 as compared to the industry median of 1.92x. This reflects NTO’s decent financial position to tackle its short-term obligations against the broader industry.  Gross margin of the company stood at 89.8% in FY19, as compared to the industry median of 70.5%. On a valuation front, NTO has P/BV multiple of 4.9x as compared to the industry average (Technology) of 4.0x on TTM basis. Therefore, considering the current trading levels, decent liquidity position, improved key margins and no material impact on its financial performance due to COVID-19 Pandemic, we have a watch stance on the stock at the current market price of A$1.365 per share, up 10.976% on 27 April 2020, owing to its recent Q1FY20 update. 
 
 
Comparative Price Chart (Source: Thomson Reuters)

Disclaimer

The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkine.com.au and associated pages are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation. Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product. The link to our Terms & Conditions has been provided please go through them and also have a read of the Financial Services Guide. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine Pty Ltd do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as personalised advice.