Peppermint Innovation Limited

PIL Details

A Look at the March Quarter Results: Peppermint Innovation Limited (ASX: PIL) is a developer of Peppermint Platform technology. Its platform offers payments, eCommerce, delivery & logistics services, and financial services to the Philippines market. As of 6 May 2021, the company’s market capitalisation stood at ~$36.54 million. During the March quarter, PIL completed an oversubscribed capital raising of $2.5 million to quote again on the ASX officially. It received $1 million via the exercise of shareholders options. The capital has been raised to meet the paid-up capital stipulation under the Philippines’ regulations, sales, promotion of bizmoto platform, and operational expansion.

During the March quarter, the company reported an increase in the number of registered bizmoGo riders (636), bizmoto agents (55K), and Merchants (688). PIL rolled out a new micro-insurance product-bizmoProtect in alliance with Cebuana Lhuillier Insurance Solutions. It inked agreements with the Bank of the Philippine Islands (BPI) and Cebuana Lhuillier to provide a mobile top-up facility to the bizmoto agents. PIL received $397K of cash receipts from customers and held a cash reserve of $2.76 million as of 31 March 2021.

Q3FY21, Net Cash Flows from Operating Activities (Source: Company Reports)

Reinstatement to Official Quotation: On 11 October 2019, PIL notified the suspension of securities from the official quotation on ASX. This suspension is due to a disclaimer of opinion on its Annual Report for FY19. Its reinstatement was subject to the lodgement of its Audited Annual Report (AR) of FY20, AR of 1HFY19 and satisfaction of all the conditions under the Listing Rules and ASX’s discretion. On 24 February 2021, PIL submitted a statement of confirmations to ASX stating fulfilment of all the requirements for reinstatement to official quotation. On the same date, ASX notified that the company’s securities would be officially traded from 25 February 2021, post its recapitalisation and raise of $2.5 million (issue of 250 million shares at $0.01 per share).

Key Risks: The company is impacted by limited business operations, lower cash receipts and loss of workforce due to stringent lockdown measures in the Manila Metro area and four other provinces.

Outlook: PIL awaits approval on the application submitted to the Philippines SEC (Securities Exchange Commission) to list Peppermint Finance Inc. Post-approval, PIL plans to introduce bizmoPay-App-based micro-enterprise lending programs to its qualified agents and registered network members. The company plans to implement a new incentivised referral program for the bizmoto App in the next quarter to increase the mobile App transactions and its agent network. As per the contract, PIL will run a marketing campaign to promote its services to BPI’s registered online account holders.

Stock Recommendation: The stock of PIL gave a positive return of 81.81% in the past three months and a positive return of 81.81% in the past six months. The stock is currently trading towards its 52-weeks’ low level of $0.020. The stock of PIL has a support level of ~$0.018 and a resistance level of ~$0.022. Considering the current trading levels, decent results of Q3FY21, increase in top line and gross profit in 1HFY21, plans to launch bizmoPay App, decent outlook, and associated risks of the pandemic restrictions in Manila, we give a ‘Speculative Buy’ rating on the stock at the current market price of $0.020, down by ~13.044% on 6 May 2021.

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

Angel Seafood Holdings Limited

AS1 Details

AGM Announced on 28 May 2021: Angel Seafood Holdings Limited (ASX: AS1) is engaged in the sales and distribution of certified organic and sustainable oysters. As of 6 May 2021, the company’s market capitalisation stood at ~$22.62 million. The company announced to hold a virtual Annual General Meeting (AGM) on 28 May 2021. The Board encourages all shareholders to submit proxy forms before the Meeting.

A Look at the First Quarter Results: AS1 registered $1 million revenue, up by 15% YoY with a steady price of oysters for most Q1FY21. Its cash receipts amounted to $0.9 million, up by 14% YoY. The company reported $1.3 million oysters’ sales, up by 21% on pcp and the highest for Q1FY21. This result was due to the sales momentum experienced in the lead up to Easter, robust demand across the retail segment and a decent uptick in the restaurant channel. It generated cash receipts of $0.9 million from customers, up by 14% YoY in the quarter. AS1 witnessed an increase of 36% YoY in biomass and touched the highest number (33 million oysters) of oysters on hand to cater to the growing demand. Its leases spanning the Eyre Peninsula are running near capacity.

Q1FY21 Result Highlights (Source: Company Reports)

Key Risks: The company faces the risk of overstocking obsolete inventory and poor survival rates of oysters on the leases. It also meets the risk of changes in the production volume and prices realised from the oysters’ sale. 

Outlook: The company is undertaking growth measures to double production and increase profitability. The construction of the FlipFarm project is underway and on schedule and budget. AS1 is conducting ‘Summer oysters’ trials which are progressing well (decent survival rates) to be available in early January 2022 for sale in summer. AS1 expects summer oysters will extend the sales period to complete calendar year and yearly sales by 10-15%. AS1 is also progressing in the process of acquiring 10Ha of undeveloped water in Streaky Bay to target the production of over 20 million oysters per year.

Stock Recommendation: The stock of AS1 gave a negative return of 17.64% in the past six months and a positive return of 21.73% in the past nine months. The stock is currently trading lower than the 52-weeks’ average price level of $0.095-$0.275. The stock of AS1 has a support level of ~$0.134 and a resistance level of ~$0.151. On a TTM basis, the stock of AS1 is trading at a price to book value multiple of 1.3x lower than the industry (Food & Tobacco) average of 2.5x, thus seems undervalued. Considering the current trading levels, decent financial results in Q1FY21, growth plans for exceeding production beyond 20 million oysters every year, FlipFarm project in process, valuation on a TTM basis and associated risks of survival rate for oysters, we give a ‘Speculative Buy’ rating on the stock at the current market price of $0.140 on 6 May 2021.

AS1 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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