Alcidion Group Limited

ALC Details

Alcidion Expands Partnership with Nextgate: Alcidion Group Limited (ASX: ALC) is a provider of intelligent informatics software for high-performance healthcare. As on 26 November 2020, the market capitalisation of the company stood at ~$208.04 million. The company has recently expanded its reseller agreement with NextGate to the United Kingdom and Ireland, which was earlier limited to Australia and New Zealand. The extension of the agreement is likely to contribute to the company’s growth strategy with a competitive position in the UK market.

ALC Signs ~$9.5 Million Deal with NHS Trust: The company has signed a five-year contract of $9.47 million with NHS Foundation Trust for its OPENeP electronic prescribing and medicines administration system and its Miya Precision solution. The company is likely to book a total contract value of $5.48 million in FY21.

Quarterly Highlights (For the Period Ended 30 September 2020): During the quarter ended 30 September 2020, the company signed new contracts and renewals with a total value of $4.8 million, reflecting an increase of 30% on the previous quarter. The company will be able to recognize total contracted revenue of $14.7 million in FY21. During the quarter, the company reported an increase of 34% in cash receipts to $6.4 million and reported a net cash outflow of $1.12 million from operating activities.

Cash Flows from Operating Activities (Source: Company Reports)

Stock Recommendation: The company has reported a decent start to FY21. As per ASX, the stock of ALC is trading close to its 52-week high of $0.235 and seems to have reached its market potential. The stock of ALC gave a return of 42.85% in the past three months and a return of 60% in the last one month. On a technical analysis front, the stock of ALC has a support level of ~$0.185 and a resistance level of ~$0.227. On a TTM basis, the stock of ALC is trading at an EV/Sales multiple of 10.1x, higher than the industry median (Software & IT services) of 7.7x, and thus seems overvalued. Considering the current trading levels, steep price movement in the past months, softer market conditions, higher EV/Sales multiple, and key investment risks, we suggest investors to book profit and recommend a ‘Sell’ rating on the stock at the current market price of $0.200, down by 4.762% on 26 November 2020.

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

K2 Asset Management Holdings Ltd

KAM Details

Monthly FUM and Fund Performance: K2 Asset Management Holdings Ltd (ASX: KAM) is an Australian based equity fund manager, offering strategies for retail, wholesale, and institutional investors. As on 26 November 2020, the market capitalization of the company stood at ~$24.10 million. As on 1 November 2020, the company reported a total FUM of $97.5 million and a net outflow of $2.4 million. The company has recently entered an investment management agreement to become responsible entity of the Apostle Dundas Global Equity Fund with funds under management of $1.02 billion of the latter company.

FY20 Financial Highlights: During the year ended 30 June 2020, the reported a decline in revenue from management to $1.98 million from $4.36 million in FY19. At the end of the same period, performance fees stood at $709.85k, reflecting a rise from $16.83k in FY19. During the year, total revenue of the company was $3.14 million. During the year, the company reported a decline in loss after tax to $740.67k, down from $1.34 million in FY19.

FY20 Financial Highlights (Source: Company Reports)

Stock Recommendation: The company is focusing on growing its FUM and is prioritizing to return to profitability in the coming years. The company has scheduled its AGM on 23 December 2020. As per ASX, the stock of KAM is inclined towards its 52-weeks’ high levels of $0.120 and seems to have reached its market potential. The stock of KAM gave a return of 100% in the past three months and a return of 85.18% in the last one month. On a technical front, the stock of KAM has a support level of ~$0.069 and a resistance level of ~$0.121. Considering the softer market conditions, volatile in equity markets, falling revenues, and key investment risks, we give a ‘Sell’ rating on the stock at the current market price of $0.100 as on 26 November 2020.

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

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