Stock Details

Laybuy Group Holdings Limited

Decent Growth in Revenue: Laybuy Group Holdings Limited (ASX: LBY) is engaged in the provisioning of buy now pay later services. The market capitalization of the company stood at $245.11 million as of 16^th November 2020. Recently, the company has rolled out a globally unique and innovative digital BNPL Mastercard® card in Australia, which enables customers to purchase goods and services in-store using Laybuy with a simple tap of their smartphone. For the quarter ended 30^th September 2020, Gross merchandise value (GMV) of NZ$127.1 million and annualized GMV stood at NZ$508.4 million, reflecting a rise of 162% over Q2 FY20. As a result of growth in GMV, the company reported a rise of 166% to $7.3 million in revenue. In addition, the recorded growth of 48% in active merchants to 6,323.

Revenue Growth (Source: Company Reports)

Outlook: Looking forward, the company is focused on improving operational efficiencies and merchant and consumer experience. Besides, the company plans to focus on growing user engagement and repeat purchases via improvements in the Laybuy App.

Stock Recommendation: As on 30^th September 2020, the cash balance of the company stood at NZ$31.8 million, reflecting a rise of NZ$4.8 million. LBY has an EV/Sales multiple of 19.5x as compared to an industry average of 65.4x on a TTM basis. In the past one month, the stock has corrected 14.06%, and as a result, the stock is trading closer towards its 52-week low level of $1.360, offering decent opportunities for accumulation. On a technical analysis front, the stock of LBY has a support level of ~$1.37 and a resistance level of ~$1.436. Thus, in light of the growth in GMV, rising topline, positive outlook, and key risks associated with the business, we give a “Speculative Buy” recommendation on the stock at the current market price of $1.405 per share, with no change on 16^th November 2020.

Vection Technologies Ltd

Partnership with Luiss Business School: Vection Technologies Ltd (ASX: VR1) is a real-time software company with a market capitalisation of $115.88 million as of 16^th November 2020. Recently, the company has entered a formal partnership with Luiss Business School to ramp up the promotion of its AR Healthcare solutions in the public and private healthcare sector. During Q1 FY21, the company recorded cash inflows from client activities of ~$0.5 million, which reflects a strong operational consolidation in a challenging COVID-19 global environment. During the three-months, VR1 progressed well on its 6-months objectives, specifically in healthcare and distribution and technology partners. As of now, VR1 is engaged in multiple contracts in strategic industries which were delayed due to the global market uncertainty in the previous quarters.

Key Metrics (Source: Company Reports)

Outlook: Looking forward, the company plans to focus on advancing its solutions in the healthcare, education, and automotive sectors and entry into new verticals including the defense industry. The company plans to conduct its 2020 Annual General Meeting on 4^th December 2020.

Stock Recommendation: As of 30^th September 2020, the company reported total cash at bank of ~$8.3 million. The company added that its financial position would ramp up its strategic core-business operations, research, and development activities, and its strong progression towards sustainable recurring revenue generation activities. On a technical analysis front, the stock of LBY has a support level of ~$0.11 and a resistance level of ~$0.13. In the past three and six months, the stock of VR1 has moved up by 204.87% and 316.66%, respectively. As a result, we are of the view that most of the positive factors have been priced in at current trading levels and suggest investors to wait for a better entry price. Hence, we give an “Expensive” recommendation on the stock at the current market price of $0.125 per share, up by 4.166% on 16^th November 2020.

Identitii Limited

Decent Rise in Cash Receipts: Identitii Limited (ASX: ID8) helps regulated entities to reduce their exposure to regulatory risk, without replacing existing technology systems. The market capitalisation of the company stood at $15.81 million as of 16^th November 2020. For the quarter ended 30^th September 2020, ID8 reported a rise of 48% in receipts from customers to $0.271 million. During Q1 FY21, the company reported a fall of 9% in cash outflows from operating expenses over Q4 FY20. During the same period, the company executed a five-year agreement with Mastercard, which validates its new strategy. ID8 was also helped by the various Federal and State Government stimulus packages, which were offered to businesses impacted by COVID-19. During FY20, the company recorded a loss amounting to $7,074,479 as compared to $8,163,297 in FY19.

Cash Flow (Source: Company Reports)

Outlook: Going forward, the company is likely to expand customer opportunities with the help of ISO 27001 certification. In addition, several new sales and marketing activities are driving increased interest.

Stock Recommendation: The company closed September 2020 quarter with $1.726 million in cash. ID8 is trading at a price to book value multiple of 14.9x as compared to the industry median of 5.2x on a TTM basis. On a technical analysis front, the stock of ID8 has a support level of ~$0.134 and a resistance level of ~$0.150. In addition, the stock has moved up by 57.60% in the last six months. Thus, considering the low market capitalization, loss marking business, and high debt to equity, we advise investors to ‘Avoid’ the stock at the current market price of $0.145 per share with no change on 16^th November 2020.

Comparative Price Chart (Source: Refinitiv, Thomson Reuters)

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