Bigtincan Holdings Limited

BTH Details

Ceasing to be a Substantial Holder: Bigtincan Holdings Limited (ASX: BTH) provides a leading AI-powered sales enablement automation platform. Bank of America Corporation and its related bodies corporate ceased to become a substantial holder in the company on 19 April 2022.

1HFY22 Highlights: During the period, BTH finished the Brainshark acquisition and added operating scale to the business. BTH improved its adjusted EBITDA position via synergies from Brainshark.

Key Risks: BTH’s operational and financial performance could be impacted by the rising market share of peers in the industry in which it operates. In addition, the company’s performance could be affected by a shift in new technology.

Outlook: Looking forward, the company continues to be recognized as a global leader in a large and growing TAM space. The company is also on track to achieve or surpass $119 million in ARR and $109 million in revenue for 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 company is trading below its 52-week low-high average of $0.615 - $1.530, respectively. The stock of BTH has been corrected by ~5.84% in the past one month. The stock has been valued using an EV/Sales multiple-based illustrative relative valuation and arrived at a target price of low double-digit upside (in % terms). The company can trade at a slight discount to its peers, considering the COVID-19 uncertainties and rising losses. For the purpose of valuation, peers such as Nearmap Ltd (ASX: NEA), Infomedia Ltd (ASX: IFM), Livetiles Ltd (ASX: LVT), and others have been considered. Considering the indicative upside in valuation, rising top-line, increasing ARR, synergies from a recent acquisition, decent 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 $0.720, down by ~2.702% as on 22 April 2022.

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

BTH Daily Technical Chart, Data Source: REFINITIV 

Toys“R”Us ANZ Limited

TOY Details

Change in Directors’ Interest: Toys“R”Us ANZ Limited (ASX: TOY) is engaged in the distribution of toys, confectionary, and homeware products. Recently, the company announced that Kevin Andrew Moore had made a change to holdings in the company by acquiring 160,000 fully paid ordinary shares at a consideration of $0.1149 per share. As announced on 31 March 2022, TOY announced the retirement of Mr Patrick Raper from the role of Company Secretary and appointed Mr Wei Si for the same.

Insights of 1HFY22: During the period, monthly online marketing spend was increased, which follows the commissioning of autonomous robot warehouse operations. TOY received 125k orders through the Toys“R”Us e-commerce website, reflecting  growth of ~62% over pcp.

Financial Summary (Source: Analysis by Kalkine Group)

Key Risks: The business could also be affected by the instability in supply and demand. In addition, TOY is exposed to financial risks caused by changes in foreign currency exchange rates and interest rates.

Outlook: TOY believes that the UK is one of the most advanced e-commerce markets in Europe, and the company is planning UK expansion as Europe is the largest toy market with an online retail share of 25%.

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 company is trading near its 52-week low level of $0.075, offering a decent opportunity for accumulation. The stock of TOY has been corrected by ~19.99% in the past one month. The stock has been valued using an EV/Sales multiple-based illustrative relative valuation and arrived at a target price of low double-digit upside (in % terms). The company can trade at a slight premium to its peers’ average EV/Sales multiple, considering a market opportunity in UK and expansion plans. For the purpose of valuation, peers such as Baby Bunting Group Ltd (ASX: BBN), Super Retail Group Ltd (ASX: SUL), Michael Hill International Ltd (ASX: MHJ), and others have been considered. Considering the expected upside in valuation, growing top-line, signing of the agreement, decent 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 $0.100, down by ~4.761% as on 22 April 2022.

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

TOY 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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