LiveTiles Limited

LVT Details

Q4FY21 Performance Update: LiveTiles Limited (ASX: LVT) is engaged in the development and sale of digital software for workplaces via subscription agreements. The company has recently provided an update on its Q4FY21 results.

• The company posted cash receipts of $14.6 million in the quarter, reflecting an increase of over 30% over the pcp.
• ARR grew by ~17% to $62.8 million
• Net operating cash outflow improved by ~24% to $1.2 million, compared to the prior quarter.
• LVT ended the period with a cash position of $16.7 million as of 30 June 2021.

Revenue Trend (Source: Analysis by Kalkine Group)

Key Risks: The company is dependent on its technological prowess to win on clients and achieve profitability. However, any disruption in the technological font might impact the operations of the company.

Outlook: The management commissioned a strategic business review where it identified opportunities for operational improvements. LiveTiles Reach, continues to post decent results, with a growth of ~709% in licence sales in the past twelve months. LVT will declare its full-year results on 26 August 2021.

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: On 2 July 2021, the company has announced that it has secured a deal with nutrition and wellness company Nestle. The deal has been valued at $2.1 million for an Employee Experience solution across the global workforce. As per ASX, the stock of LVT is trading below its average 52-weeks’ levels of $0.142-$0.305.   The stock of LVT gave a negative return of ~8.82% in the past three months and a positive return of ~3.33% in the past one month. The stock has been valued using an EV/Sales multiple-based illustrative relative valuation method and arrived at a target price of low double-digit (in percentage terms). The company might trade at some discount to its peers’ average, considering the decrease in liquidity, competition risk and continued negative profitability. For the purpose of valuation, few peers like Class Ltd (ASX: CL1), Vista Group International Ltd (ASX: VGL), have been considered. Considering the expected upside in valuation & current trading levels, increase in cash receipts, growth in ARR, increased traction in LiveTiles Reach and the key risks associated with the business, we recommend a ‘Speculative Buy’ rating on the stock at the market price of $0.150, as on 19 August 2021, 09:58 AM (GMT+10), Sydney, Eastern Australia.

LVT Daily Technical Chart, Data Source: REFINITIV

Epsilon Healthcare Limited

EPN Details

Business Update: Epsilon Healthcare Limited (ASX: EPN) is a healthcare and pharmaceuticals company having operations in Australia and Canada. As per a recent announcement, its clinic group, TetraHealth has launched a new clinic for in-person consultations in Melbourne. TerryWhite Chemmart Hawthorn will service the Victorian patient demand.

Q2FY21 Results Update:

• The company reported a reduction in net cash used in operating activities by ~50%, compared to the prior quarter, aided by receipt of 2020 R&D tax incentive.
• Tetra Health continued with its decent performance, reflecting ~48% increase in products dispensed during Q2FY21, when compared to Q1FY21. It reported half-year revenue of over $785k.
• The cash position stood at $3.1 million during the period end.

Trend in Cash & Short-Term Investments (Source: Analysis by Kalkine Group)

Key Risks: The company has operations outside Australia and thus is exposed to foreign currency risks.

Outlook: The company has continued to invest in its Southport Facility in order to add new production capabilities and improved filtration technologies. It expects decent growth from the Tetra Health business with the launch of new clinics across the east coast of Australia.

Stock Recommendation: The company has recently appointed Dr Rob Jenny and Mr Simon Rowe as its new directors effective from 1 August 2021. As per ASX, the stock of EPN is trading below its average 52-weeks’ levels of $0.120-$0.325.  The stock of EPN gave a negative return of ~37.99% in the past one year and a positive return of ~10.71% in the past one month. On a TTM basis, the stock of EPN is trading at an EV/Sales multiple of 4x, lower than the industry median (Healthcare) of 13.4x, thus seems undervalued. Considering the valuation on TTM basis & current trading levels, launch of new clinic platform, growth in products dispensed, increased investments and the key risks associated with the business, we recommend a ‘Speculative Buy’ rating on the stock at the current market price of $0.155, as on 19 August 2021, 09:59 AM (GMT+10), Sydney, Eastern Australia.

EPN 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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