Sensen Networks Limited

SNS Details

Acquisition of Snap Network Surveillance: Sensen Networks Limited (ASX: SNS) is involved in the development and sale of SenDISA platform-based products. The market capitalisation of the company stood at ~$49.56 million as on 1^st December 2020. Recently, the company has finished the acquisition of the business and business assets of Snap Network Surveillance Pty Ltd. The acquisition follows the completion of technical and legal due diligence as well as the execution of the Business Purchase Agreement with Snap. The consideration for the transaction includes the issue of fully paid ordinary shares in SenSen worth of $1,000,000. The company added that the force multiplier product and the background IP of Snap would support the growth of the SNS’s product portfolio.

Q1FY21 Result Highlights: During September 2020 quarter (Q1 FY21), SNS reported cash inflows from operations of ~ $1.455 million, comprising customer cash receipts of ~$1.1 million and R&D tax credits of $355K. During the quarter, the company added five new Smart City customers through its distribution partners. Over the quarter, the company developed plans to rapidly increase the distribution network and direct product marketing in the coming months to further accelerate sales momentum. As on 30^th September 2020, the cash balance of the company stood at $2.3 million.

Cash Flow (Source: Company Reports)

Outlook: The company expects that its business would be profitable and cashflow positive in FY21. The company expects to report a contracted revenue of over $5.6 in FY21. The company is scheduled to conduct its 2020 Annual General Meeting on 2nd December 2020.

Stock Recommendation: On a TTM basis, SNS has EV/Sales multiple of 11.7x, which is higher than the industry median (Technology) of 5.7x. In addition, the stock of SNS is trading at a price to book value multiple of 68.7x against the industry average (Technology) of 13.5x on TTM basis. In the last six months, the stock has provided a return of 41.17% and has recently touched its 52-weeks high price of $0.140. We have considered 14-day RSI and default values have been used. After careful consideration, it was observed that the stock is currently in the overbought zone. Hence, we expect a marginal fall in the stock price in the coming times. On a technical analysis front, the stock of SNS has a support level of ~$0.09 and a resistance level of ~$0.18. Considering the decent returns in the last few months, current trading levels, RSI levels and valuation, we suggest investors to book profit and give a “Sell” rating on the stock at the current market price of $0.140 per share, up by 27.272% on 1^st December 2020, owing to the acquisition of Snap Network Surveillance.

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

Centrepoint Alliance Limited

CAF Details

Decent Financial Outcomes in FY20: Centrepoint Alliance Limited (ASX: CAF) provides a range of financial advice and licensee support services to its clients. For the year ended 30^th June 2020, the company recorded gross revenue of $131 million, up 11% on the previous year, underpinned by strong growth in new advisers as well as a significant rise in average gross revenue per advice firm. In addition, adviser fee revenue mounted up by 61% to $10 million and the average annual adviser moved up by 84% to $36k. During FY20, the company recorded a net loss before tax of $2.2 million, mainly due to legacy claims of $3.6 million.

Financial Summary (Source: Company Reports)

Strategic Initiatives: For FY21, the strategic initiatives of the company revolve around attracting and retaining quality advisers, preparing advisers and licence for final Royal Commission changes, review its portfolio of businesses etc.

Stock Recommendation: The company closed FY20 with cash balance of $12.2 million, up 54% on FY19. In the last six months, the stock of CAF has surged by 100% and it recently touched its 52-weeks high price of $0.205. On a TTM basis, the stock is trading at a price to book value multiple of 2.0x against the industry median of 1.3x on TTM basis. We have considered 14-day RSI and default values have been used. After careful consideration, it was observed that the stock is currently at the overbought zone. Hence, we expect a marginal fall in the stock price in the coming times. On a technical analysis front, the stock of CAF has a support level of ~$0.154 and a resistance level of ~$0.38. Thus, considering the current trading level, RSI levels and valuation, we give a “Sell” rating on the stock at the current market price of $0.205 per share as on 1^st December 2020.

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

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