Mach7 Technologies Limited

¹Ratios such as P/E, EPS, and ADY are on Trailing Twelve-Month basis, which are subject to change based on certain factors such as company performance, and stock price changes.

²ROE has been taken for the Half-Year Ending December 2021. 

M7T Details

Key Positives:

Rising Gross Margin (96.4% in 1HFY22 Vs 95.1% in 1HFY21), Growing Current Ratio (3.57x in 1HFY22 Vs 2.74x in 1HFY21)

Key Negatives: 

Negative Operating Margin (-10.7% in 1HFY22), Negative ROE (-0.7% in 1HFY22)

Key Investment Risks:

COVID-19 Uncertainties, Stiff Competition, Technology Risk, etc. 

Change in Directors’ Holdings: Mach7 Technologies Limited (ASX: M7T) is the provider of medical imaging systems and develops innovative image management and viewing solutions for healthcare organizations. Recently, director David Chambers has made a change to holdings in the company by acquiring 12,340 ordinary shares at the consideration of $0.635 per share.

Insights of Q3FY22: The following picture showcases a broader overview of the company’s performance during the three months ended 31 March 2022:

Quarterly Summary (Source: Analysis by Kalkine Group

Key Risks: The company is exposed to risks arising from the failure in commercializing new technology. In addition, the business operates in a very competitive environment and a rising market share of peers could impact its operational health.

Outlook: The company believes that the additional $3.4 million of Contracted Annual Recurring Revenue (CARR) in Q3FY22, along with the $13.4 million, are likely to convert to ARR in FY23. The company is optimistic that the trend of strong performance in 1H would continue in 2HFY22.

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 M7T is trading near its 52-week low level of $0.490, offering a decent opportunity for accumulation. The stock has been corrected by ~10.71% in the past month. The stock has been valued using an EV/Sales multiple-based illustrative relative valuation method and arrived at a target price of low double-digit (in percentage terms). The company might trade at a slight discount to its peers, considering the macroeconomic uncertainties and negative margins, etc. For valuation, a few peers like Volpara Health Technologies Ltd (ASX: VHT), Beamtree Holdings Ltd (ASX: BMT), and Alcidion Group Ltd (ASX: ALC) have been considered. Considering the expected upside in valuation, decent cash position, increasing sales order, decent outlook, current trading levels, and key risks associated with the business, we recommend a ‘Speculative Buy’ rating on the stock at the closing market price of $0.505, down by ~5.607% as of 17^th June 2022.

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

M7T 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 for 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 stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in stock prices tend to find resistance when they are rising, and a 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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