ImpediMed Limited

IPD Details

ACC Accepts SOZO HF Abstract: ImpediMed Limited (ASX: IPD) is a medical technology firm using bioimpedance spectroscopy (BIS) technology to derive data to maximise patient health. The company has developed FDA cleared and CE marked medical devices such as SOZO® which is distributed in selected global markets. As on 17^th February 2021, the market capitalisation of the company stood at ~$182.01 million. The company recently declared that American College of Cardiology (ACC) had accepted SOZO heart failure (HF) abstract assessing the use of SOZO® BIS technology in patients at the risk of rehospitalisation at the time of discharge for poster presentation at the 70th Annual Scientific Session during May 2021 in Georgia.

Q2FY21 Result Highlights: The company reported growth in total revenue by 40% YoY to $2.1 million during Q2FY21. This was due to the record growth in SOZO revenue to $1.9 million, up by 58% Y-o-Y. SOZO revenue includes revenue from SaaS, devices and contract fees, and clinical business of AstraZenenca. The company recorded the highest number of patient tests - 28k plus, up by 33% YoY for the said quarter. IPD’s Annual Recurring Revenue (ARR) went up by 86% YoY to $7.8 million during Q2FY21. The gross margins from the sale of SaaS rose over 90% for Q2FY21. During the quarter, the company entered two contracts with AstraZeneca for more than $4.5 million. The company held $19 million cash on hand as on 31 December 2020.

Growth of SOZO Revenue, Q-o-Q (Source: Company Reports)

Outlook: The firm forecasts the net operating cash outflows to be below $4 million for Q3FY21, including additional spend on product improvement for heart and renal failure. It plans to grow commercial sales of heart failure and establish pilot programs in the major heart failure centres.

Valuation Methodology: EV/Sales Multiple Based Relative Valuation (Illustrative)

Data Source: Refinitiv, Thomson Reuters, 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 IPD gave a positive return of 26.08% in the past three months and a positive return of 81.25% in the past six months. The stock of IPD has a support level of ~$0.076 and a resistance level of ~$0.188. We have valued the stock using Enterprise Value to Sales based illustrative relative valuation method and have arrived at a target price of low double-digit upside (in % terms). For the purpose, we have taken peers like ImExHS Limited (ASX: IME), Mach7 Technologies Limited (ASX: M7T), Next Science Limited (ASX: NXS) to name a few. We believe that the company can trade at a slight premium as compared to its peer average, considering record growth in total revenue in Q2FY21, increase in patient tests, modest outlook, while also considering the that the company has been trading at a premium in the past 3-years over its peer median. Considering decent performance in Q2FY21, and modest forecast for Q3FY21, rise in patient tests, valuation, and associated risks, we give a ‘Speculative Buy’ rating on the stock at the current market price of $0.145 on 17^th February 2021.

IPD Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

Digital Wine Ventures Limited

DW8 Details

Partnership with Vivino: Digital Wine Ventures Limited (ASX: DW8) invests in early-stage technology driven firms and Winedepot, a direct-to-consumer trading and logistics platform is its key investment. As on 17^th February 2021, the market capitalisation of the company stood at ~$89.48 million. On 16^th February 2021, the company notified that one of its Directors, Dean Taylor, acquired 4,750,000 fully paid ordinary shares via off-market transfer. In a recent announcement, DW8 notified the market of its technical integration and onboarding completion as a part of its collaboration with Vivino, a wine application and online marketplace.

Trading Update: On 9 February 2021, the company has reported 15,674 cases of shipment in January 2021, up by 727% on pcp basis. It processed a total of 7,408 orders in January 2021, up by 605% on same period last year. The company witnessed significantly higher sales in January 2021 as typically compared to previous years. DW8 shipped average of 2.13 cases per order vs 1.85 cases mean over the last 1 year due to continued momentum to buy directly through wineries.

Summary of Orders Processed & Shipped, MoM (Source: Company Reports)

Q2FY21 Results: During Q2FY21, the company generated a total revenue of $712k, up by 78% on Q1FY21. DW8 added 300 new brands 239 new customers on Winedepot platform during the quarter. The company raised $1.35 million during the quarter via conversion of options to shares. During Q2FY21, DW8 acquired Wine Delivery Australia Pty Ltd (WDA), a fourth party logistics solutions provider (4PL) to the wine industry. It received $645k of receipt from customers during Q2FY21 and held $6.90 million of cash and cash equivalents as on 31 December 2020.

Outlook: DW8 expects to convert a considerable proportion of the balance of 108.31 million unlisted options prior to 23 February 2021. Looking ahead, the plans to expand its addressable market, by providing wineries with the ability to list their products for sale across a broad range of Direct-to-Consumer channels including online retailers and marketplaces such as Amazon, eBay and Vivino.

Stock Recommendation: The stock of DW8 gave a positive return of 13.04% in the past three months and a positive return of 73.33% in the past six months. The stock is currently trading above the 52-weeks’ average price band of $0.004-$0.066. The stock of DW8 has a support level of ~$0.047 and a resistance level of ~$0.052.  Considering the decent results in Q2FY21, rise in shipped cases, nil debt to equity multiple, and valuation, we give a ‘Hold’ rating on the stock at the current market price of $0.049, down by 10.910% on 17^th February 2021.

DW8 Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

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