Infomedia Limited

Profit Booking:A leading global SaaS solutions provider Infomedia Limited (ASX: IFM) has recently announced its half yearly result for the financial year 2019. It reported an increase in its revenue by 14% to $40.4 Mn. This was driven by the rollout of the global Nissan contract along with several new contracts in the first half and huge investments made in the previous period. It reported NPAT at $7.3 Mn, an increase of 28% as compared to the previous period. Its EBITDA increased by 36% to $16.9 Mn because of sustained cost discipline and project delivery. The company has no debt on its balance sheet. Owing to the strong result, the company declared an unfranked interim dividend of 1.75 cps with the payment date of April 3, 2019 and the record date of March 4, 2019.

The cash generative nature of the company helped it report a 17.7% increase in its operating cash flow. It reported cash & cash equivalents of $7.5 Mn in December 2018 which decreased from $13.28 Mn in June 2018 due to investments worth $5.6 Mn paid to acquire Nidasu which is the leading provider of data analytics to automotive and dealerships throughout Australia. Additionally, Infomedia expects to deliver strong FY2019 results. It is continuously exploring growth opportunities which include strategic acquisitions of companies which are close to its product and services. It is also considering a reduction in dividend pay-out ratio as part of its capital management program.

 

P&L Statement (Source: Company Reports)

From analysis front, its financials look good as top line and gross margin has shown robust growth in 1HFY19. Its PE multiple is trading at 32.59x on February 27, 2019, which is higher than the industry median of 3.7x which indicates share price is overvalued.Its net margin for H1FY19 is 18.1% which is lower than the industry median of 20.2% indicating the company’s bottom line performance to be lower than its peer group. From the technical standpoint, the momentum strength indicator, Relative Strength Index (14-days) indicates the stock price to be in the overbought region. Hence, investors can book the profit as it is trading close to 52-week higher level. We give a ”Sell” recommendation on the stock at the market price of $1.550 (up 1.639% on 27 February 2019).

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