TZ Limited

TZL Details

TZ Limited (ASX: TZL) develops intelligent devices and smart device systems. 

Q1FY22 Update (Ended 30 September 2021)

• The company’s net cash generated from operating activities for this quarter was $0.3 million, which is significantly improved on the -$0.4 million result in the previous corresponding period (Q1FY21) and the -$1.2 million result reported for Q4FY21.
• TZL now has 193 million shares on issue and $2.5 million debt facility (BBSW+4.5%) fully drawn with First Samuel. Total debt was previously $11.75 million. The Company continued to restructure its debt with First Samuel Limited, the Company’s largest shareholder.

Result Performance (FY21 Ended 30 June 2021)

• There was an increase of 30% in subscription revenues for SaaS, maintenance and hosting services. Recurring revenues grew to $2.3 million in FY21 from $1.7 million in FY20.
• The loss for the consolidated entity after providing for income tax amounted to $1.66 million, as compared to $5.12 million in the previous year.
• No dividends were declared or recommended during the period.

Key Data (Source: Company Reports)

Outlook:

The company can see strong momentum being built across its business. Its strong balance sheet, a large open order book and a very strong new business pipeline, are expected to support in the coming period.

Key Risks: 

The company stated that Covid-19 has been impacting the business in several ways. The company undertakes certain transactions denominated in the foreign currency and is exposed to the foreign currency risk through fluctuations in the foreign exchange rate.

Stock Recommendation: 

The stock of TZL gave a negative return of ~31.25% in the past six months and a positive return of ~134.04% in the past one year. However, the company has posted negative net margin in FY 2021. Also, the company has posted negative EBITDA margin of -0.3%.   

Considering the key risks associated with the business, we advise the market players to liquidate the stock.

Thus, we recommend a ‘Sell’ rating on the stock at the current market price of A$0.115 per share (Time: 2:58 PM, (GMT +10), Sydney, Australia) on 21^st October 2021.

Technical Overview:

Chart:

Source: REFINITIV, Purple Color Line Reflects RSI (14-Period)

Note 1: The reference data in this report has been partly sourced from REFINITIV.

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