Ziptel Limited

Mixed Updates: Ziptel Limited (ASX: ZIP) is a micro-cap company with the market capitalization of circa $2.55 Mn as of October 15, 2018. The company delivered total revenue degrowth of 87.9% to $26,154 in FY18 as compared to the prior year which was at $215,280. While the company banked other revenue of $453,128 because of the majority relating to a tax credit received under the Australian Government’s Research and Development (R&D) Tax Incentive Program. However, ZIP’s FY 18 net loss after tax declined to $221,219 compared to $650,167 in 2017, on the back of maintaining a disciplined cost approach. As of June 30, 2018, the company had cash and cash equivalent of $1.64 Mn. No dividend was declared during the period as the Group is currently in the development phase.

During the period, ZIP announced that it had entered an agreement with London based Space Digital Media Limited (SDM) to have certain ZipT technology integrated into the Convo App and to assist with the development of the Convo App. As per the Agreement, ZIP has granted a license to certain IP rights to the ZipT technology to SDM and will assist in the development of the Convo App in return for royalty payments of between 10% and 20% of Net Revenue received in relation to the Convo App. As of now, SDM focuses on building revenue in three core areas i.e., advertisement, branded content, and E-Commerce. The objective of the Convo App is to enable publishers to drive traffic to their pages and benefit from ongoing advertisement revenue splits. Furthermore, the company continues to support SDM as it readies to ramp up marketing efforts for the Convo App.


FY18- P&L Highlights (Source: Company Reports)

Meanwhile, the share price has risen 21.43% in the past three months as at October 12, 2018 and traded at a lower level. Hence, we give a “Hold” recommendation on the stock at the current market price of $0.017 as the group continues to review the opportunities both for its current platforms and otherwise, and has been able to find support from the 50 day moving average (at around $ 0.0167).
 

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