Peppermint Innovation Limited

PIL Details

Business Update: Peppermint Innovation Limited (ASX: PIL) engages in developing and commercialization of mobile banking, payments, and remittance business with operations in the Philippines. The market capitalisation of the company as of 9 July 2021 stood at ~$ 27.11 million. As per a recent announcement, the company has signed a cash deposit acceptance agreement with the Philippines’ third-party electronic payment provider, Electronic Commerce payments, Inc. ECPay has more than 13,000 partner outlets for cash-in services including retail chains such as 7-Eleven, San Mig Food Avenue and select Petron stations etc. The Agreement strategically expands cash-in services for bizmoto agents nationwide that allows 55,000 plus agents to physically cash-in money.

Signed Facilitator Agreement: The company has signed payments facilitator agreement with G-Exchange Inc. that enables any Filipino GCash mobile wallet holder will be able to pay for goods and services from the bizmoto platform. 

Q3FY21 Financial Performance: 

• The company has recorded an increased no. of registered bizmoto agents to 55,218, bizmoGo riders to 636 and Merchants to 688.
• During the quarter, PIL has reported receipts from the customer at $397k. The quarter ended with the cash balance of $2.76 million as of 31 March 2021.

Revenue Trend (Source: Analysis by Kalkine Group) 

Outlook: The company is focused on operational expansion by targeting sales marketing campaign for bizmoto platform. Recently, launched bizmoProtect - a micro-insurance product offering with the partnership of Cebuana Lhuillier Insurance Solutions that could positively impact the financial performance of the company.

Key Risks: The company is prone to credit risks and has prudent credit policies in place in order to mitigate the risk.

Stock Recommendation: The stock of PIL is trading below its average 52-weeks' levels of $0.014-$0.044. The stock of PIL gave a positive return of ~45.45% in the past one year and a negative return of ~15.78% in the past one month.  Considering the current trading levels, expected economic recovery, equity capital raise, strategic collaboration and optimistic outlook and the key risks associated with the business, we recommend a ‘Speculative Buy’ rating on the stock at the current market price of $0.016 as on 9 July 2021.

PIL Daily Technical Chart, Data Source: REFINITIV

TZ Limited

TZL Details

Debt Update: TZ Limited (ASX: TZL) develops intelligent devices and smart device systems like smart lockers and cabinet security solutions that enable businesses to manage, control and monitor their assets. The market capitalisation of the company as of 9 July 2021 stood at ~$21.18 million. As per a recent announcement, the company has established a new debt facility of $2.5 million on 30 June 2021 with a coupon rate of BBSW + 4.5% per annum, which will mature on 31 July 2022. As part of the recapitalisation, the company and First Samuel has agreed to convert $2 million of debt under the old facility to equity at a price of $0.12 per share and expects to send the notice of EGM to shareholders to seek conversion approval.

Q3FY21 Financial Performance:

• The company has recorded a decline in net cash outflow from operating activities to $0.4 million in Q3FY21, compared to $1.2 million in Q3FY20.
• The business has undergone structural change by reducing annual ongoing fixed costs by ~$2.5 million.
• The significant cash flow for operating activities in Q3FY21 were receipts of $2.6 million, payments of product manufacturing and operating costs of $1.0 million and payment of staff cost and administration and corporate costs at $1.6 million and $0.3 million, respectively.
• TZL has recorded a revenue growth of 8% at the end of the period. The quarter ended with cash and cash equivalent at $0.5 million as of 31 March 2021.

Revenue Trend (Source: Analysis by Kalkine Group)

Outlook: The management previously stated a goal of $10 million of revenue by FY23. The company plans to invest in its core technology and upgrades existing software platforms to strengthen operational activities and support business expansion. Additionally, there is heightened demand for TZ’s access control, smart lock and self-serve locker bank solutions in the existing base of blue-chip US customers due to the emerging COVID-19 pandemic. 

Key Risks: Despite the positive uplift in its sales, the company has been facing challenges in proceeding with the projects, placing an order, workplace requirements and revisiting capital expenditure programs during the COVID-19 outbreak.

Stock Recommendation: As per a recent announcement, the company has successfully raised capital from existing shareholders under Rights Issue and raised ~$7.06 million form existing eligible shareholders. The stock of TZL is trading below its average 52-weeks' levels of $0.037-$0.360. The stock of TZL gave a positive return of ~23.71% in the past six months and a negative return of ~7.69% in the past one month. On a TTM basis, the stock of TZL is trading at an EV/Sales multiple of 2.4x, lower than the industry median (Technology) of 6.2x. Considering the current trading levels and valuation on a TTM basis, expected economic recovery, raise in capital from eligible shareholders, demand due to COVID-19 pandemic, optimistic outlook and the key risks associated with the business, we recommend a ‘Speculative Buy’ rating on the stock at the current market price of $0.115, down by ~4.167% as on 9 July 2021.

TZL 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 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 analysis has been achieved and 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 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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