Ai-Media Technologies Limited

AIM Details

1HFY22 Summary: Ai-Media Technologies Limited (ASX: AIM) provides live and recorded captioning, transcription, subtitles, translation and speech analytics using a proprietary, cloud-based technology platform. As announced on 1 April 2022, the company has bought back 6,159 shares with respect to its on-market buy-back. During 1HFY22, AIM rolled out Lexi 2.0 (fully automated), and Smart Lexi 2.0 (semiautomated) live captioning products, which resulted in the improvement of automated live captioning quality outcomes at much more affordable rates than premium service. This has also increased the company’s addressable market.

Financial Summary (Source: Analysis by Kalkine Group)

Key Risks: The company’s performance could be impacted by the rising market share of peers in the industry. In addition, the business is also exposed to risks arising from a shift in the new technology.

Outlook: For FY22, the company expects revenue in the range of $60-$62 million. In addition, AIM is optimistic about growth in new markets driven by global regulatory tailwinds for live captioning, and this has contributed to a strong sales pipeline.

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 AIM is currently trading near its 52-week low level of 0.475, offering a decent opportunity for accumulation. The stock has been corrected by ~18.64% in the past month. The stock has been valued using the EV/Sales Multiple based illustrative relative valuation method and arrived at a target price of low double-digit upside (in % terms). The company can trade at a slight discount to its peers’ average P/E multiple, COVID-19 uncertainties and losses in business. For the purpose of valuation, peers such as Straker Translations Ltd (ASX: STG), Nine Entertainment Co Holdings Ltd (ASX: NEC), and HT&E Ltd (ASX: HT1) have been considered. Considering the expected upside in valuation, growing topline, synergies from the acquisition, decent outlook, current trading levels, and key risks associated with the business, we recommend a ‘Speculative Buy’ rating on the stock at the closing price of $0.480, down by ~4.001%, as on 07 April 2022.

Markets are currently trading in a highly volatile zone due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.

AIM Daily Technical Chart, Data Source: REFINITIV 

Note 1: The reference data in this report has been partly sourced from REFINITIV

Note 2: Investment decisions 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 analysis has been achieved and subject to the factors discussed above alongside support levels provided.

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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