Uscom Limited

UCM Details

Q2FY21 Results Highlights: Uscom Limited (ASX: UCM) is a manufacturer and distributor of premium non-invasive pulmonary and cardiovascular medical technology devices. Its products portfolio consists of Uscom 1A+, BP+, BP+ Reporter, SpiroSonic digital ultrasonic spirometry technologies, the VENTITEST and VENTITEST-S ultrasonic ventilator calibration devices. As on 27^th January 2021, the market capitalisation of the company stood at ~$23.83 million. For December 2020 quarter, the company reported an increase of 125% in sales revenue to $0.98 million and cash receipts rose by 149% to $1.91 million. For the December 2020 quarter, UCM earned positive cash flows of $0.29 million and cash reserve balance stood at $2.28 million, up by 54% on pcp basis.

Financial Summary, Q2FY21 (Source: Company Reports)

Uscom China Listed II National High Technology Enterprise: On 4^th December 2020, UCM announced that it has been recognised as the second National High Technology Enterprise by the Torch High Technology Industry Development Center, a department of the Ministry of Science and Technology (MOST) of China for its valuable contribution to the economy in the last 15 years of its operations.

Outlook: The company anticipates the approval of its products- BP+, SpiroSonic and VENTITEST for launch in the US and Chinese markets over next 1 year. It is also expecting approval for SpiroSonic AIR which is in the last leg of regulatory approval in China and Europe.

Stock Recommendation: The stock of UCM gave a negative return of 3.03% in the past three months and a negative return of 13.51% in the past six months. The stock is currently inclined towards its 52-weeks’ low level of $0.11. The stock of UCM has a support level of ~$0.146 and a resistance level of ~$0.185.  On TTM basis, the stock of UCM is trading at EV/Sales multiple of ~5.9x as compared to industry (Healthcare Equipment & Supplies) of ~14x and is thus undervalued. Considering the current trading levels, sales growth in Q2FY21, decent outlook, associated risks of the pandemic and TTM valuation, we give a ‘Speculative Buy’ rating on the stock at the current market price of $0.160, up by 3.225% on 27^th January 2021.

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

Kycker Limited

KYK Details

December 2020 Quarter Results: Kycker Limited (ASX: KYK) is a regulatory technology firm catering to the financial services companies and other regulated sectors requiring primary source data for KYC processes for customer verification & monitoring, and prevention against money laundering, tax fraud and evasion. As on 27^th January 2021, the market capitalisation of the company stood at ~$26.47 million. During December 2020 quarter, the company reported an increase in revenue by 3% YoY to $625k, primarily driven by company’s corporate clients. This is due to the increased regulations on KYK clients’ businesses leading to 20% higher monthly run rate expenditure by them in 1H21. During Q2FY21, its Enterprise revenue rose by 43% on pcp basis and KYK transitioned to a long-term contractual business model with more Enterprise clients and provision of value-added services.

Key Partnerships & New Product Offerings: During Q2FY21, KYK entered a 1-year extension contract with NTT/ Bank of Ireland for $220k, and another with FrankieOnie by which partner customers can access KYK’s platform. It launched its core product ‘Company Watch’ globally and developed a new product UBOVerify during the quarter. The company experienced a 27% QoQ rise in contracted annual recurring revenue (ARR) as more clients shift towards contractual commitments vs pay as you go (PAYG) and expects this trend to continue. The company held robust cash balance of $7.2 million as of 31^st December 2020. 

Cash Flow from Operating Activities, Q1FY21 (Source: Company Reports)

Outlook: The company anticipates adoption of its KYC technology given the higher need for verification, monitoring and automated tech-enabled solutions by the firms to comply with the increased regulations. Hence, it plans to grow and market its product offerings in regions where KYC technology adoption is likely to increase. 

Stock Recommendation: The stock of KYK gave a negative return of 8.43% in the past three months and a negative return of 8.43% in the past six months. The stock is currently trading slightly higher than its 52-weeks’ average price level band of $0.035-$0.11. On the technical analysis front, the stock of KYK has a support level of ~$0.069 and a resistance level of ~$0.098. On a TTM Basis, the stock is trading at a price to book multiple of 1.7x, lower than the industry median of 3.2x. Considering the underlying growth drivers for KYK business, decent Q2FY21 results, key partnerships and new product offerings, and valuation on TTM basis, we give a ‘Speculative Buy’ rating on the stock at the current market price of $0.076, down by 1.229% on 27th January 2021.

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

Disclaimer  

The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkine.com.au and associated pages are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation. Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product. The link to our Terms & Conditions has been provided please go through them and also have a read of the Financial Services Guide. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine Pty Ltd do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as personalised advice.