SenSen Networks Limited

SNS Details

This report is an updated version of the report published on the 21 April 2022 at 3:49 PM GMT.

1HFY22 Highlights: SenSen Networks Limited (ASX: SNS) is engaged in the development and sale of SenDISA platform-based products and services. The company raised $10 million in November and December 2021 through two placements and an SPP to fund continued growth momentum. SNS acquired Scancam Industries in July 2021 for $6.5 million.

Financial Summary (Source: Analysis by Kalkine Group)

Key Risks: The company is exposed to risks arising from macroeconomic uncertainties. In addition, the business could be impacted by failure in compliances, which may lead to fines, penalties, etc.

Outlook: Due to the impact of floods in QLD and NSW, SNS has revised revenue guidance for FY22 to $9.0 million - $9.5 million from the previous guidance of ~$11 million. The revised revenue guidance indicates record revenue growth of 60%-70% over FY21 revenue of $5.5 million.

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 SNS is trading at par to its 52-week low level of $0.105, offering a decent opportunity for accumulation. The stock has been corrected by ~24.13% in the past three months. The stock has been valued using an EV/Sales multiple-based illustrative relative valuation and arrived at a target price of low double-digit upside (in % terms). The company can trade at a slight discount to its peers, considering the COVID-19 uncertainties and negative margins, etc. For the purpose of valuation, peers such as Adacel Technologies Ltd (ASX: ADA), LiveHire Ltd (ASX: LVH) and Bigtincan Holdings Ltd (ASX: BTH) have been considered. Considering the expected upside in valuation, rising revenue, wining of new contracts, decent outlook, current trading levels, and key risks associated with the business, we recommend a ‘Speculative Buy’ rating on the stock at the current market price of $0.105, as on 21 April 2022, 11:00 AM (GMT+10), Sydney, Eastern Australia. Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

SNS 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.

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

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