Volpara Health Technologies Limited

VHT Details

Upcoming Full Year Results Announcement: Volpara Health Technologies (VHT) operates in Advanced Medical Equipment & Technology sector. VHT is engaged in providing digital health solutions to enable personalized breast care, providing cancer screening as per the objective measurement of breast density. The company majorly operates in North America followed by APAC and EMEA regions.

• Recently, company released an announcement on hosting an investor webinar on 26^th May at 9.00 am AEST, 11.00 am NZST which will be hosted by company’s CEO Craig Hadfield and CFO Ralph Highnam.

Q4FY22 highlights:

• The company reports quarterly cash from customers of ~NZ$8 million (up 48%), while subscription-based cash receipt will be NZ$7.5 million (up 39%) compared to Q4FY21. VHT records NZ$18.2 million cash on hand in Q4FY22.
• The annual recurring revenue (ARR) from software has reached NZ$31.8 million and recorded a new ARR of NZ$5.2 million up 38% compared to the previous best in FY21.

The recent quarter results indicate that the company is expected to provide better FY22 results on pcp basis.

Revenue Details, (Source: Analysis by Kalkine Group)

Key Risks:

• The revenue of VHT is highly concentrated in one region i.e. North America, which makes the company over dependent and therefore its’ revenue might get affected as per regulatory changes.
• VHT also faces IT security risk and needs engagement in the area of security penetration testing.

Outlook: VHT has one of the biggest databases of raw breast x-ray images and the company has recently achieved a milestone of 60 million x-ray images with 5.5 million unique women. The data is stored in the company’s cloud, which will make its technology better. VHT has recently reported good quarterly results and it is expected that its FY22 result will be better as compared to the previous year.

Valuation Methodology: EV/Sales-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 VHT is trading below its 52-week low-high average of $0.660 - $1.330, respectively. The stock has been corrected by ~18.18% in the past month. The stock of the company 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 might trade at a slight discount compared to its peers, considering Industry competition, Negative Operating Income, etc. For the purpose of valuation, a few peers like Alcidion Group (ASX: ALC), PainChek (ASX: PCK), Pro Medicus (ASX: PME), and others have been considered. Considering the indicative upside in the valuation, improvement in database accuracy in the long run, improvement in cash flow, better-expected FY22 results, geographical reach, current trading levels, and key risks associated with the business, we recommend a ‘Speculative Buy’ rating on the stock at the closing market price of $0.720, up ~1.408% as on 24th May 2022.

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

VHT Daily Technical Chart, Data Source: REFINITIV

HARMAXIS LIMITED

PXS Details

PXS Business Updates: Pharmaxis Limited (ASX: PXS) operates in the pharmaceutical sector engaged in developing a clinical-stage drug for fibrotic and inflammatory diseases and focused on myelofibrosis. The company majorly generates revenue from the mannitol respiratory segment divided into Aridol and Bronchitol other major source is new drug development. PXS business is diversified in the following geographies Australia, Europe, South Korea, and USA.

Key Highlights:

• The company has two approved drugs as per a recent quarterly update and five drugs are under trial while two drugs PXS-5505 and PXS-4728 under phase 2 trial. Where PSX-5505 “Myelofibrosis” has an addressable market of US$1billion and PSX-5505 “HCC” has an addressable market of US$7billion.
• Cash and Cash equivalent for the current quarter of March 2022 has decreased to $14.81 million compared to the previous quarter’s $20.866 million.
• Revenue for the quarter March-2022 has decreased to ~$1.7 million compared to the previous FY21 quarter which was ~$5.92 million due to one-off compliance and other costs.

Future growth drivers for PXS, (Source: Analysis by Kalkine Group)

Key risk:

• The pandemic has impacted Aridol sales because lung function testing gets limited to severe cases because of health risks.
• The company operates globally it is exposed to currency risk and because of Russia Ukraine war PXS has pulled out from Russia, which was quite a big market for the company.

Outlook: PSX’s future growth is dependent on the success of two lead drugs PSX-5505 and PSX-6302, both drugs have a combined market of US$ 15 billion. PXS-5505 phase 1c results show a good tolerable profile as per the study while PXS-6302 also completed 1-month active treatment. Although covid-19 continues to impact sales, the future outlook is focused on the successful development of drugs under trial.

Valuation Methodology: EV/Sales-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 PXS is trading below its 52-week low-high average of $0.071 - $0.150, respectively. The stock has been corrected by ~15.99% in the past month. The stock of the company 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). Referring to the risk in this sector company might trade at some discount to its peers, considering PXS Lower margins, COVID-19 impact, future uncertainty, expected growth from addressable market, etc. For the purpose of valuation, a few peers like Medical Developments International Ltd (ASX: MVP), Arovella Therapeutics Ltd (ASX: ALA), Probiotec Ltd (ASX: PBP) and others have been considered. Considering the indicative upside in the valuation, future growth prospects in the long run, sale of distribution rights, current trading levels, and key risks associated with the business, we recommend a ‘Speculative Buy’ rating on the stock at the closing market price of $0.084, down ~1.176% as on 24^th May 2022.

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

PXS 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 for 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 a 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 price

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