Yojee Limited

Inking of SaaS Agreement: Yojee Limited (ASX: YOJ) is a logistics technology company with a market capitalisation of ~A$110.17Mn as on 16^th May 2019. It develops powerful logistics and supply chain management capabilities via its world-class blockchain secured software. Recently, by its release, the company confirmed that it had inked a three-year master service agreement with global top 10 logistics company Geodis Singapore Pte Ltd. The company also mentioned that subject to any termination event occurring, at the end of 3 years, the agreement would be renewed for successive 12-month periods.

As per the release, the agreement will govern multiple projects throughout the Asia Pacific where the company will provide its SaaS logistics and supply chain management technology on a project by project basis on standard commercial terms over 3 years with setup, subscription, professional service and transaction fees applicable. The company mentioned that the master service agreement had been entered with a significant multinational enterprise as an overarching agreement which had a potential to expand across multiple projects throughout Asia. Geodis aims to digitise its logistics operations, optimise efficiency and to enhance the customer experience across the Asia Pacific for land transport and cross-border logistics.

A Quick Look at Recent Quarter: Recently, the company released its Quarterly activity report for the quarter ended March 2019 wherein it stated that the group had inked 3 new software customer contracts which include 1 National leader and 2 SME’s across two countries plus an Enterprise customer contract upgrade. Besides this, due to strong demand in other markets and verticals, the company rolled out several partnership agreements in countries like Australia, Indonesia and in Dubai, UAE. The company pointed out that it uses channel partners to target traction in new jurisdictions to further broaden the Company’s ecosystem and customer reach.

YOJ stated that SendYojee, its Singaporean freight network enterprise, had continued to attract clients who are seeking a viable solution to cater for increased freight network volumes. SendYojee reported a record quarter reflecting almost 40% growth as compared to the same quarter last year achieving 8,194 deliveries in Singapore between Yojee and its downstream partners.

The net cash used in operating activities stood at A$1.350Mn. During the same quarter, it made payments for product manufacturing and operating costs and administration and corporate costs of A$0.649Mn and A$0.502Mn, respectively.

 Q1FY19 Operating Cash Flow Statement (Source: Company Reports)
 
What to Expect From YOJ: The company stated that it is beginning to gain traction with dual revenue stream customers who are both Software and SendYojee freight customers.This would enable visibility and seamless freight volume scalability along with access to more delivery service types. The company pointed out that subsequent to quarter end, it had secured several new accounts including a new marquee customer in Malaysia, which enables the expansion of the SendYojee network to Malaysia in the coming weeks.
 
Stock Recommendation: The asset to equity ratio stood 1.05x in 1HFY19 which implies a rise of 1.5% on the YoY basis and it can be said that the company’s assets are primarily being financed by debt. The return on invested capital (or ROIC) stood at -33.9% in 1HFY19. Its ROE stood at -33.9% in 1HFY19 as compared to the industry median of 7.8%. Meanwhile, the stock has rewarded the shareholders generating year to date phenomenal return of 113.11%. Hence, considering the aforesaid facts and current trading level, we give a “Hold” recommendation on the stock at the current market price of $0.110 (down 15.385% on 16 May 2019, post a significant rise noted a day before). 

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