Envirosuite Limited

Response Provided by EVS To ASX Query: Envirosuite Limited (ASX: EVS) had provided responses to the query of ASX with regards to the Tata Steel win which was announced by Envirosuite. To the question posed that whether or not EVS consider the information to have a material effect on the securities’ price or value, the company answered “Yes”. Envirosuite got aware of the information on March 5, 2019. EVS stated that they got notified about the win on Tuesday morning March 5 from the European office that confirmation of details of purchase order were pending. Because of the time difference of UK business hours, the details were not received until Tuesday evening AEDT.

Adoption of Envirosuite platform: EVS had made an announcement that Tata Steel adopted EVS platform. The win happens to be huge as it demonstrates both the first steel manufacturing operation globally to subscribe to Envirosuite and the first industrial manufacturing win in the European region. Envirosuite would be utilised at Tata Steel’s Port Talbot operation which is in West Glamorgan, Wales, the UK to manage as well as drive improvement with respect to air quality impacts.

Net Loss in Half-Year Results Ended December 2018: Envirosuite had posted Net loss amounting to $2.08 million in the half-year ended December 2018 as compared to $1.89 million in the same period of 2017. The company had announced numerous commercial achievements at the commencement of the financial year, and the most important was an achievement of reaching the ARR target for FY18 and numerous clients wins that gave the company a strong start for the year.


Half-Year Ended December 2018 Income Statement (Source: Company Reports)

Stock Recommendation: From the valuations perspective, Envirosuite seems to be slightly overvalued as its P/B ratio stood at 7.0x which is higher than the industry median (Industrials) of 6.0x indicating that the market players can think to book profits. Also, the company’s key margins are lower than the industry median which could be a concern for the market players. The company’s stock has witnessed substantial increases in the past few months.

In the span of the previous six months, the company’s stock has witnessed the rise of 92.77% while, in the time frame of the previous three months, it encountered the rise of 135.29%.It can be said that these increases have pushed the stock near to its 52-week higher level. Therefore, we assume that the current stock price has discounted all the key growth catalysts and we advise the market players to liquidate their holdings.
Therefore, we give a “Sell” recommendation on the stock at the current market price of A$0.160 per share. 
 

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