Access Innovation Holdings Limited 

AIM Details

Expansion of Ai-Media Product Suite: Access Innovation Holdings Limited (ASX: AIM) is a provider of recorded and live captioning, translation, and transcription services through its cloud-based platform. It serves paid and free-to-air TV networks and operates in North America, EMEA, Asia, and Australia. As of 15 April 2021, the market capitalisation of the company stood at ~$132.49 million. On 15 April 2021, the company announced the roll-out of Smart ASR^TM (Smart ASR) live captioning technology. Smart ASR is for customers requiring affordable captioning service and is AIM’s maiden live product, which does not require real-time human curation. It has been launched using the recent proceeds raised from the IPO. The company is engaged in advanced talks with many broadcast customers for the implementation of Smart ASR.

Results of 1HFY21 Released: The company recorded revenue of $22.72 million, up by 100% YoY in 1HFY21. This revenue growth was due to ongoing demand for the company’s services, especially in Live Enterprises spanning all regions. The pandemic situation led to video adoption as the main communications tool for education and enterprises. For 1HFY21, the Live Enterprise product line grew to $13.55 million, up by 443% YoY. In January 2021, the Group fully acquired the share capital of Caption IT LLC and Caption Access LLC, two US-based firms, for $1.9 million cash via the issue of 421k shares at $1.046 per share. It incurred a net loss after tax of $7.48 million, up by 111.4% YoY for 1HFY21. Its cash receipts increased to $20.66 million as of 31 December 2020. AIM held a cash and cash equivalent balance of $8.76 million as of 31 December 2020.

1HFY21 Financial Highlights (Source: Company Reports)

Key Risks: The company risks the foreign currency fluctuations’ impact on its overseas earnings, interest rate changes on the borrowings, and diversify revenue drivers for its platform’s future growth.

Outlook: Ai-Media has confirmed its forecast of Services revenue of $43.8 million, gross profit of $18.1 million and a pro forma EBITDA loss of $4.8 million, as given in the prospectus. The acquisitions of CaptionAccess and Caption IT in the US in January 2021, will aid the company to add an expected revenue of US$1.1 million from these businesses in 2HFY21.

Valuation Methodology: EV/Sales Multiple Based Relative Valuation (Illustrative)

Data Source: Refinitiv, Thomson Reuters, 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 AIM gave a positive return of 17.19% in the past month and a negative return of 17.11% in the past six months. The stock is currently trading lower than the 52-weeks’ price band of $0.71-$1.51. The stock of AIM has a support level of ~$0.887 and a resistance level of ~$0.97. We have valued the stock using an Enterprise Value to Sales based illustrative relative valuation method and have arrived at a target price of high single-digit upside (in % terms). For this purpose, we have taken peers like Nine Entertainment Co Holdings Limited (ASX: NEC), Ooh! Media Limited (ASX: OML), Seven West Media (ASX: SWM) and others. We believe that the company can trade at some premium than its peer average, considering its 100% revenue growth, higher cash receipts in for 1HFY21, and expanded portfolio with the two recent acquisitions. Considering the current trading levels, increase in 1HFY21 top-line, expanded portfolio suite through Smart ASR technology, decent outlook provided for FY21, potential benefits from the US-based CaptionAccess and Caption IT acquired, and valuation, we give a ‘Hold’ rating on the stock at the current market price of $0.920, up by 0.546% on 15 April 2021.

AIM Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

Note: Investment decision 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 Valuation has been achieved and subject to the factors discussed above.

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