Openpay Group Limited

OPY Details

Recent Updates: Openpay Group Limited (ASX: OPY) was incorporated in 2019, it works into BNPL (Buy Now Pay Later) segment across automotive, healthcare, home improvement, memberships and education industries.

• Debt Facility Amended: As per its 22^nd December 2021 announcement, the company has upsized its existing corporate debt facility of ~$25 million with an additional ~$5 million.
• Relieve from Escrow Account: A total of 24,844,664 fully paid ordinary shares were removed from the escrow account on 16^th December 2021.
• New Agreement: On 2^nd December 2021, OPY has signed a new agreement with American Express. From this contract, American Express Card holders will be able to pay through OPY’s product.

Q1FY22 in a Nutshell:

1QFY22 Highlight (Source: Analysis by Kalkine Group)

Key Risks:

• Competition from Peers: The company works in a very competitive environment, which leads to a risk of new providers or existing competitors providing a comparatively superior solution or experience.
• Regulatory Risk: OPY is exposed to complex regulatory environment as it deals in the payment’s solution, which is being regulated by the authorities.

Outlook:  OPY with American Express is planning to explore the B2B and B2C platforms more in future and with the commencement of its products usage, it anticipates strong volume growth in the upcoming quarters. For first time its TTV surpassed ~$100 million and looking forward the company anticipates even strong TTV for its 2QFY22, backed by the continued market leading growth in Australia.

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: The company is trading below its 52-week low-high average of $0.75 - $3.57, respectively. The stock of OPY has been corrected by ~51.29% in past six months. The stock has been valued using an EV/Sales multiple-based illustrative relative valuation and arrived at a target price of low double-digit upside (in % terms). The company can trade at a slight discount to its peers’ median EV/Sales multiple, considering the COVID-19 disruptions, negative ROE, and high debt to equity ratio, etc. For the purpose of valuation, peers such as Money3 Corp Ltd (ASX: MNY), Eclipx Group Ltd (ASX: ECX), EML Payments Ltd (ASX: EML), and others have been considered. Considering the expected upside in valuation, growth in revenue, rising active customers and merchants, record growth in TTV, current trading levels, collaboration with American Express and key risks associated with the business, we recommend a ‘Speculative Buy’ rating on the stock at the current market price of $0.750 as on 23 December 2021, 12:10 PM (GMT+10), Sydney, Eastern Australia.

OPY Daily Technical Chart, Data Source: REFINITIV

Micro-X Limited

MX1 Details

Change in Directors’ Interests: Micro-X Limited (ASX: MX1) was incorporated in 2011. By using cold cathode X-ray sources, it provides medical and security products.  As per the announcements on 22^nd December 2021, multiple directors changed their interests as follows:

Change of Directors’ Interest Highlight (Source: Analysis by Kalkine Group)

1QFY22 & Other Updates:

• On 22^nd December 2021, it received a rebate related to the R&D Tax Incentive (net of income tax) of ~$ 2.1 million for the financial year ending 2021.
• The company executed ~$13 million of government contracts to fund its products and updated the status of Gen II’s launch in December on track.
• The cash outflow from operating activities was reported as ~$5.67 million for its 1QFY22, mainly owing to Staff Costs. With the cash receipts from customers of ~$0.73 million, the company closed its quarter with the cash balance of ~$25.66 million at the end of 30^th September 2021 versus ~$30.13 million at the end of 30^th June 2021.

Key Risks:

• COVID-19 and Omicron: The company is vulnerable to the risks associated with the impacts of COVID-19 and lockdown due to the new variant Omicron, which might further affect its operations.
• Clinical Trials Risks & Regulatory Risks: The company is prone to failure during clinical trials and non-approval from regulatory bodies, due to which its operations are at risk.
• Technology Risks: Its business is reliant on technology and has its related challenges. Failure in regular keep-up and upgradation to which could lead to operational risks of lower efficiencies and temporary halts, thereby affecting its revenue.

Outlook:  Out of its various government contracts, it’s Airport Checkpoint Portal programme’s first commercial baggage scan is scheduled for 2023. While on the other hand, its lightweight stroke diagnostic imaging technology is scheduled for 2024 for its first launch, after the necessary clinical trials and regulatory approvals. Along with the commercialisation and development of its four lines, looking forward its focus is to accelerate the activities related to Airport Security and Brain CT scanners.

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

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 the company has been corrected by ~25.35% in the past nine months. Currently, the stock is trading lower than the average of its 52-week low and high levels of $0.225 and $0.450, respectively. The stock has been valued using the EV/Sales multiple based illustrative relative valuation method and arrived at a target price with an upside of low double-digit (in % terms). After considering the expected cyclical effects related to COVID-19, dependency on clinical trials and contingent efficiency in executing contracts, the company can trade at a slight discount to its peers. For the purpose of its valuation, peers like Atomo Diagnostics Ltd (ASX: AT1), Cochlear Ltd (ASX: COH), and Universal Biosensors Inc (ASX: UBI) have been considered. Considering the company’s 1QFY22 updates, expected launches in 2023 & 2024, current trading levels, indicative upside in the valuation, and key risks associated with the business, we give a “Speculative Buy” rating on the stock at the current market price of $0.260, 10:40 AM (GMT+10), Sydney, Eastern Australia, as on 23 December 2021. 

MX1 Daily Technical Chart, Data Source: REFINITIV

OncoSil Medical Limited

OSL Details

1QFY22 Updates: OncoSil Medical Limited (ASX: OSL) was incorporated in 2005 and it is a biotechnology company, whose main focus is on pancreatic cancer (LAPC) and bile duct cancer

• Owing to the COVID-19, the company’s PanCo clinical study faced delays and now have been submitted for its publication.
• On 1^st November 2021, Prof Ricky Sharma, was appointed to the board as a non-executive director.
• The cash outflow from operating activities appeared as ~$2.68 million for its 1QFY22, owing majorly to the staff costs of ~$1.83 million. With the cash receipts of ~$51k, OSL closed its quarter with a cash balance of ~$9.56 million at the end of 30^th September 2021 versus ~$12.24 million at the end of 30^th June 2021.

Cash Balance Highlight (Source: Analysis by Kalkine Group)

Key Risks: Having its business related to technology and being dependent on the regulatory and approving bodies, the company might get impacted if things go haywire. This might affect its operations for an unknown tenure.

Outlook: The company, with its agreements in line with EMEA’s distributors, is targeting the smaller European countries and other places like Switzerland, Austria, Portugal, Greece, Israel, Turkey, and Egypt. Also, with the anticipation of normality from COVID-19, its other focus is to advance commercialisation in UK and Middle East.

Stock Recommendation: The stock of the company has given a negative return of ~35.86% in the past six months. Currently, the stock is trading below the average of its 52-week low and high levels of $0.037 and $0.140, respectively. On a TTM basis, the stock of OSL is trading at a P/BV multiple of 2.5x, lower than the industry’s mean (Biotechnology and Medical Research) of 12.0x, thus seems to be undervalued. Considering the growth strategies in line, current trading levels, valuation on a TTM basis, 1QFY22 performance and key risks associated with the business, we recommend a ‘Speculative Buy’ rating on the stock at the current market price of $0.038, 11:48 AM (GMT+10), Sydney, Eastern Australia, as on 23 December 2021.

OSL 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 for 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 is 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 the 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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