Nearmap Ltd

NEA Details
Record Portfolio Growth: Nearmap Ltd (ASX: NEA) is engaged in online aerial photomapping. The company recently provided an update on FY19 preliminary results.

Financial Highlights: The company’s closing ACV portfolio has grown to $90.2 million as at 30 June 2019, representing an increase of 36% over the prior year. North America’s ACV portfolio reported record annual ACV growth of 76% at US$22.7 million. ACV portfolio for Australia & New Zealand reported a growth of 19% at $57.9 million. The group cash balance as at 30 June 2019 stood at $75.9 million.


ACV Portfolio Details (Source: Company Reports)

The core business cash balance as at 30 June 2019 stood at $17.8 million, an increase of $0.3 million on the opening balance.The group achieved cash flow breakeven from its core operations, in line with the guidance. 

Stock Recommendation: The stock of the company generated returns of 80.54% over a period of 6 months. FY19 was characterised by a record portfolio growth along with the achievement of full year cash flow guidance and progress on delivery of strategic growth. It continued to enhance its market leadership position in Australia and New Zealand while building momentum in North America. 

The results for FY19 are expected to be announced in August. Although the company has been performing tremendously to generate returns for the shareholder, we presume that the current market price might have discounted all the recent developments. Moreover, on the valuation front, EV/Sales and Price/Book Value multiple for TTM stand at 20.1x and 15.4x, which are higher than the peer median of 4.03x and 2.9x, respectively, indicating the overvalued position at the current juncture. Currently, the stock is trading slightly towards its 52-week high of $4.290, which increases the probability of correction later or sooner as investors might book profit at higher levels. Hence, considering the premium valuations and current trading level, we suggest the investors to book the profit at the current level and, therefore, recommend a “Sell” rating on the stock at the current market price of $3.340, down 9.485% on July 12, 2019.


NEA Daily Chart (Source: Thomson Reuters) 

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