Bigtincan Holdings Limited

BTH Details

Unveil of Bigtincan for Salesforce: A sales enablement automation company, Bigtincan Holdings Limited (ASX: BTH) offers platforms including Bigtincan Learning Hub and intelligent automation solutions used for sales, marketing, learning, and manage sales training courses.

• On January 11, 2022, the company informed the market that it had launched an AI-based module, “Bigtincan for Salesforce”, primarily for Bigtincan Content Hub and Bigtincan Learning Hub.
• Notably, Bigtincan for Salesforce has been created with technologies driven by BTH’s recently stated Data Products Group and provides AI-driven content references to Salesforce.com users, Sales Cloud and Service Cloud.
• With an additional fee starting at $12.50 per user per month, the latest module is accessible to all Content Hub and Learning Hub customers. With the launch, BTH remains devoted to assisting Salesforce users in enhancing the buying experience for their customers in the future.

AGM &1QFY22 Update:  

• In FY21, the company’s total revenue soared ~42% on pcp and came in at $43.9 million. This growth in revenue depicts the company’s continuous focus on optimising pricing and building a sustainable subscription-based model with its customers.
• ARR stood at $53.1 million as of 30 June 2021 compared to $35.8 million reported at the end of FY20, depicting a rise of 48%.
• Coming to 1QFY22, the company’s cash receipts went up by 218% on a pcp basis, with organic cash receipts up 174%. Notably, Brainshark acquisition and integration progress were key positives in Q1FY22.
• The company exited the quarter with a cash balance of $55.7 million and remained well funded to continue executing its future growth strategy.

Trend in ARR; Analysis by Kalkine Group 

Key Risks: The company is dependent on the performance, reliability, and availability of its technology platforms, data centres and global communications systems. Any disruption, failure, and breaches of customer data could potentially impact the financials of the company. The company is also exposed to forex risks and stringent regulatory measures.

Expect What?

The company is dedicated to the mergers and acquisitions team, and targets to win new customers and upsell the existing customers. BTH is also investing in technology to support growth in digital and mobility that could positively impact the company’s profitability. BTH expects to deliver or outperform ARR of ~$119 million and revenue of ~$109 million 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 the company has been corrected by ~21.48% in the past three-months. Currently, the stock has 52-week high and low levels of $1.53 and $0.761, respectively. The stock has been valued using an EV/Sales multiple-based illustrative relative valuation method and arrived at a target price of low double-digit upside (in % terms). The company might trade at a slight discount as compared to its peers, considering rising losses, technology disruption, dependence on single products, failure to retain existing customers, etc. For this purpose of valuation, peers such as Nearmap Ltd (ASX: NEA), ELMO Software Ltd (ASX: ELO), Adacel Technologies Ltd (ASX: ADA) and others have been considered. Considering decent liquidity position, rise in revenue base, successful launch Bigtincan for Salesforce, positive outlook, robust customer base, buyout synergies, current trading levels, valuation, and key risks associated with the business, we recommend a ‘Speculative Buy’ rating on the stock at the closing market price of $0.935, down by ~3.609% as on 13 January 2022.

BTH Daily Technical Chart, Data Source: REFINITIV 

Decmil Group Limited

DCG Details

Operational Update:  Decmil Group Limited (ASX: DCG) offers services such as designing, engineering, construction and maintenance to the infrastructure, resources, energy, and construction sectors in Australia.

• On 5 January 2022, the company stated that post the completion of the performance testing of Sunraysia Solar Farm, the related authorities have verified the accomplishment of the necessary Hold Point testing (including HP1, HP2 and HP3).
• Consequently, the company has obtained approval for unrestricted operations at the Sunraysia Solar Farm. Notably, the substantial completion under the contract has started and is likely to be achieved on or before the end of January 2022.
• DCG also won government Infrastructure contracts of ~$27.8 million, which comprised ~$23.3 million with Main Roads Western Australia and ~$4.5 million with Queensland Department of Transport and Main Roads.

AGM Update:

• Talking about FY21, DCG recorded a normalised EBITDA and revenues of $7.6 million and $313 million, respectively.
• Markedly, $210 million of key transport projects and $92 million of other projects across the balance of DCG’s sectors were completed in FY21.
• The company won ~$130 million awards in new projects since 30 June 2021, thanks to its continued focus on work winning.
• In FY21, net cash flow from operations stood at $2.7 million (before repayment to surety bond providers). During the period, the company secured a $20 million subordinated debt financing and a $10 million equity raise in July 2021, thereby strengthening its balance sheet.

Activity Mix Highlight (Source: Analysis by Kalkine Group)

Key Risk: Delay in project implementation may disrupt the cash flows and strain the balance sheet. Shortage in infrastructure spending by the government may affect the order backlogs.

Outlook: The company remains well placed in the future, with an order book of ~$540 million and a project pipeline of ~ $46 billion. The company remains on track with its turnaround plan and is progressing well by retaining commercial, legal, and financial disciplines across its projects and achieving adequate work in its core sectors.

Stock Recommendation: The stock of DCG is trading near to its 52-week low level of $0.310, offering a decent opportunity for accumulation. The stock has been corrected by ~27.78% in the past six months. On a TTM basis, DCG has an EV/Sales multiple of 0.3x, compared to the industry median (Industrials) of 2x, thus seeming undervalued. Considering the robust pipeline till FY24, ongoing developments in its Solar Farm project, valuation on a TTM basis, successful completion of testing, decent liquidity position, optimistic outlook, current trading level and key risks associated with the business, we recommend a ‘Speculative Buy’ rating on the stock at the closing market price of $0.325, down by ~1.516% as on 13 January 2022.

DCG 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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