Adveritas Limited

AV1 Details

Adveritas Limited (ASX: AV1) is engaged in providing innovative measurement and analytics software solutions for businesses globally.

Results Performance (Half-Year Ended 31 December 2020 – H1FY21)

• Revenue stood at $462k, down 37% YoY. However, real revenue increased 8% in H1FY21 as H1FY20 includes $176k from the company’s non-core software, nxus, an existing platform not yet available for widespread commercial use
• Operating EBITDA loss stood at $5.7 million versus a loss of $5.5 million in H1FY20 as the company continues to scale its operations in the digital advertising industry
• Statutory loss after income tax stood at $5.8 million versus a loss of $5.6 million in H1FY20
• Cash receipts increased 14% to $504k (H1FY20: $442k)
• The cash balance, as of 31 December 2020, stood at $6.7 million and no debt

Key Data (Source: Company Reports)

Fourth Quarter Activities Report (Q4FY21) – Released on 30 July 2021

• Binding Lithium Offtake term sheet agreed with LG Energy Solution to supply 10k metric tonnes per year of lithium hydroxide (post-June 2021 Quarter)
• Annualised revenue grew by 60% to $1 million (Q3FY21: $640k)
• Sales growth continued in Q4FY21, with a further $190k revenue added in July 2021

Recent Update:

• As per the release dated 2 August 2021, the company reported strong growth in annualized revenue over July 2021. Annualized revenue as of 31 July 2021 stood at $1.2 million, indicating a growth of 19% since 30 June 2021, and 90% since 31 March 2021

Key Risks:

The company is exposed to market risk, credit risk, liquidity risk, interest rate risk, currency risk, and other price risks. Also, the company is exposed to ever-changing technological upgrades and innovations.

Outlook: 

The management is looking to expand its sales team and invest in talent in H2FY21 to support its rising sales as it plans to further commercialize and scale its technology. It is growing its sales pipeline across key verticals including gaming, cryptocurrency, insurance, and online retail. The company expects that with the rise in customer base, opportunities to cross-sell and up-sell will also increase. The company has a strong track record of upgrading customer contracts with the addition of new customers.

Technical Analysis 

Weekly Chart

Stock Recommendation:

The stock fell by 13.9% in 9 months, while grew by 12.5% in one year. It has made a 52-week low and high of $0.084 and $0.225, respectively.

Considering the aforementioned factors along with its healthy sales pipeline as well as product mix, we give a “Speculative Buy” recommendation on the stock at the current market price of $0.098 per share, (Time: 12:34 PM (GMT+10), Sydney, Australia) on 10^th August 2021. 

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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