The GO2 People Ltd

Decent Performance in Q1FY19: The GO2 People Ltd (ASX: GO2) is a micro-cap company with the market capitalization of circa $10.73 Mn as of November 16, 2018. The Company was incorporated on 30 November 2016 to be the parent company of GO2 Recruitment and GO2 Australia, which includes the Labour Hire Division and Building Division. It has now become a leading provider of vertically integrated recruitment and building services to the industry throughout Australia. The company presently generates most of the revenue part from the Labour Hire Division which accounted for around 83.9% of the total revenue in FY18 and the rest come from building services. Recently, the company posted a strong Q1FY19 performance wherein revenue grew by 50% on the corresponding quarter last year. It was mainly supported by a rise of 30% in recruitment business on June 2018 quarter and workforce personnel numbers which have grown to above 400 consistently week to week during the same period. Based on Q1FY19 performance, it was observed that the company is on track to achieve the target of tripling the business from its listing date. Further, building revenue for FY19 will depend on new contract wins, with a number of government and mining projects.

On the analysis front, the Company has achieved a four-year compound annual growth (CAGR) in revenue of 21.3% to FY18 while Gross profit recorded CAGR growth of 17.8% percent over the four years (FY15-18).The topline growth was mainly driven by the significant growth in building division during the period. Further, the company witnessed Gross margin on an average of 12.0 percent over the last four years up till FY18. As a result, Loss after tax has grown at 29.0% over the last four years on a CAGR basis. This overall growth indicated that the company is in a transition phase and on track to achieve its target of tripling the business from its listing date.


 
Revenue and Gross Margin Trend (Source: Company Reports)

Meanwhile, the share price has risen 17.27% in the past six months as at November 15, 2018 and it traded below the average of 52 week high and low prices of $0.1385. Despite the fall, the price did not break below its support level of $ 0.079 in the recent past. Considering the decent performance in Q1 FY19 and current trading level, we have a wait and watch view on the stock at the current market price of $0.105 (up 15.385% on November 16, 2018) , as investors are punting in the stock given the future prospects. 
 

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