Nearmap Ltd

NEA Details

Change in Directors’ Interest: Nearmap Ltd (ASX: NEA) is engaged in the provisioning of geospatial map technology for businesses, enterprises, and government customers. Recently, Helen Jessica Souness has made a change to holdings in the company by acquiring 24,450 fully paid ordinary shares at a consideration of $29,951.25 (average $1.225 per share).

Insights of 1HFY22: During the half-year ended 31 December 2021, the company experienced decent performance in North America and improved performance in Australia and New Zealand.

Financial Summary (Source: Analysis by Kalkine Group)

Key Risks: NEA’s business is exposed to a risk arising from the failure in maintaining data and cybersecurity.  The company’s performance could also be impacted by risks arising from the shift in technology, which can impact its operational health.

Outlook: For FY22, the company expects to report Annual Contract Value (ACV) at the upper end of the guidance range of $150 million and $160 million. NEA would continue to target growth of 20-40% in ACV and maintain underlying retention above 90% in the medium to long term.

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 NEA is trading near to its 52-week low level of $1.065, offering a decent opportunity for accumulation. The stock of NEA has been corrected by ~22.54% in the three months. 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’ average EV/Sales multiple, considering the COVID-19 disruptions and inefficiency in generating profits, etc. For the purpose of valuation, peers such as Hansen Technologies Ltd (ASX: HSN), Iress Ltd (ASX: IRE), ELMO Software Ltd (ASX: ELO), and others have been considered. Considering the indicative upside in valuation, rising revenue, ACV expansion, optimistic outlook, current trading levels, and key risks associated with the business, we recommend a ‘Speculative Buy’ rating on the stock at the current market price of $1.165, as on 16 March, 10:30 AM (GMT+10), Sydney, Eastern Australia. 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.

NEA Daily Technical Chart, Data Source: REFINITIV  

Integrated Research Limited

IRI Details

Rebalancing of Indices: Integrated Research Limited (ASX: IRI) is engaged in designing, developing, implementing and sale of systems and applications management computer software for business-critical computing. As per the recent quarterly rebalance of S&P/ASX indices, the company will be removed from All Ordinaries, which will be effective from 21 March 2022.

1HFY21 Operational and Financial Summary: During the half-year, the company experienced decent growth in most of the financial metrics as depicted in the below picture:

Financial Summary (Source: Analysis by Kalkine Group)

Key Risks: The company’s business growth is exposed to risks arising from the on-going global uncertainty caused by COVID-19 and other geo-political uncertainties. In addition, any adverse movement in the foreign currency may affect the company’s topline and bottom-line growth.

Outlook:  The company is optimistic about the positive outlook for 2HFY22 and anticipates growth in TCV and NPAT on the back of new product launches and customer wins

Valuation Methodology: P/E 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 IRI is trading below its 52-week low-high average of $0.620 - $2.780, respectively. The stock of IRI has corrected by ~16.84% in the past one month. The stock has been valued using a P/E 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’ average P/E multiple, considering the negative operating margin and other material business risks. For the purpose of valuation, peers such as Reckon Ltd (ASX: RKN), Adacel Technologies Ltd (ASX: ADA), Infomedia Ltd (ASX: IFM), and others have been considered. Considering the expected upside in valuation, new product launches, decent outlook, current trading levels, and key risks associated with the business, we recommend a ‘Speculative Buy’ rating on the stock at the current market price of $0.750, as on 16 March 2022, 10:30 AM (GMT+10), Sydney, Eastern Australia. 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.

IRI 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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