Infomedia Ltd

IFM Details

This report is an updated version of the report published on the 18 May 2022 at 3:52 PM GMT.

Indictive Proposal from TA Associates: Infomedia Ltd (ASX: IFM) provides SaaS and data analytics solutions to the parts and services sector of the automotive industry. TA Associates Management, L.P. Viburnum Funds Pty Ltd and their associates have become an initial substantial holder in the company with a voting power of 14.46% on 13 May 2022. Recently, the company has received a conditional, non-binding, indicative proposal for the 100% acquisition of Infomedia from TA Associates (“TA”) via a scheme of arrangement for a price of $1.70 per share, which is to be payable in cash. 

• TA reserves a right to reduce the offer price in the event any dividends are announced or declared by IFM.
• IFM is also in preliminary discussions with other interested parties who have made expressions of interest in respect of a potential change of control transaction.
• The company advised shareholders to not take any action in response to the Indicative Proposal as there is no certainty that the Indicative Proposal nor other discussions will result in a transaction.

Insights of 1HFY22: The below picture provides a broader idea of the company’s financial performance in 1HFY22:

Financial Summary (Source: Analysis by Kalkine Group)

Key Risks: The company is exposed to risks arising from the extreme change in technology. In addition, the business could be impacted by rising competition in the industry.

Outlook: For FY22, the company expects to report revenue in the range of $119 million to $123 million. The company’s priorities for 2HFY22 mainly include enhancement of the systems and processes to manage and scale the business effectively as well as aligning teams and investment dollars to revenue and profit growth.

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 IFM is trading above its 52-week low-high average of $1.155 - $1.805, respectively. The stock has provided returns of ~28.21% in the past month. The stock has been valued using the P/E multiple-based illustrative relative valuation and arrived at a target price with a correction of high-single-digit (in % terms). The company can trade at a slight discount to its peers, considering the COVID-19 uncertainties and other material business risks. For this purpose of valuation, peers such as Hansen Technologies Ltd (ASX: HSN), Iress Ltd (ASX: IRE), and Praemium Ltd (ASX: PPS) have been considered. Considering the expected correction, solid rally in the past months, current trading levels, volatility in the market due to Russia- Ukraine Tension, and key risks associated with the business, we advise investors to book profit and give a ‘Sell’ rating on the stock at the current market price of $1.655 as on 18 May 2022, 12:30 PM (GMT+10), Sydney, Eastern Australia.

IFM 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.

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