Integrated Research Limited

IRI Details

FY21 Trading Update: Integrated Research Limited (ASX: IRI) is engaged in the design, development, implementation and sale of systems and applications for use in Unified Communication Networks and Payment Networks. As per a recent update, the company has provided an update on its FY21 performance.

• The company expects annual revenue to be in the range of $74.1 million to $79.1 million in FY21.
• It anticipates NPAT to be in the range of $4.1 million to $7.1 million during the period.
• The cash position stood at $5.5 million as of 30 June 2021, compared to $4.7 million as of 30 June 2020.

Trend in Revenue (Source: Analysis by Kalkine Group)

Key Risks: The company’s operations have been impacted by the onset of the COVID-19 pandemic, and the prevailing uncertainties in trading conditions might still pose a challenge to the company’s operations.

Outlook: The company continues to focus on the launch of new cloud-based products for its long-term growth. It has added new customers and released a new solution for Webex in June 2021. It expects further growth in the customer base in FY22. IRI will release its FY21 results on 19 August 2021.

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 has appointed Mr. James Scott as a Non-Executive Independent Director to the Board, effective from 13 May 2021. As per ASX, the stock of IRI is trading below its average 52-weeks’ levels of $1.740-$4.920.   The stock of IRI gave a negative return of ~26.18% in the past six months and a negative return of ~15.87% in the past three months. The stock has been valued using an EV/Sales multiple-based illustrative relative valuation method and arrived at a target price of low double-digit (in percentage terms). The company might trade at some discount to its peers’ median, considering the decrease in margin performance and increase in debt-to-equity ratio. For the purpose of valuation, few peers like Infomedia Ltd (ASX: IFM), ELMO Software Ltd (ASX: ELO), Xero Ltd (ASX: XRO), have been considered. Considering the expected upside in valuation & current trading levels, better than expected results, increase in cash position and the key risks associated with the business, we recommend a ‘Speculative Buy’ rating on the stock at the market price of $1.840, as on 18 August 2021, 10:03 AM (GMT+10), Sydney, Eastern Australia.

IRI Daily Technical Chart, Data Source: REFINITIV

Openpay Group Limited

OPY Details

Q4FY21 Performance Update: Openpay Group Limited (ASX: OPY) partners with merchants to provide Buy-Now-Pay-Later (BNPL) payment solutions to customers. The company has delivered continued growth in its core businesses in Q4FY21.

• Active plans increased by ~141% to ~2 million during the period end, when compared to the prior period end.
• Active customers grew by ~69% to ~541k in 4QFY21. The number of active customers from UK stood at 51% of total active customers.
• The company has maintained decent volume growth with TTV up by ~46% to $92 million during the period when compared to the pcp period.

Trend in Revenue (Source: Analysis by Kalkine Group)

Key Risks: The company’s line of business makes it prone to stiff competition from peers in the BNPL space. Therefore, it should make investments in its technology in order to deliver enhanced products.

Outlook: OPY USA is expected to go live in early October 2021, through integration with large wholesale merchant aggregators. The acquisition of Payment Assist is expected to accelerate growth in UK. The management anticipates witnessing substantial growth in volume in the US market in FY22.

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: As per a recent update, Credit Suisse Holdings (Australia) Limited has become an initial substantial holder in the company with a voting power of 5.21%, representing 6,810,613 shares, as of 11 August 2021. As per ASX, the stock of OPY is trading below its average 52-weeks’ levels of $1.110-$4.870.   The stock of OPY gave a negative return of ~28.45% in the past three months and a negative return of ~9.28% in the past one month. The stock has been valued using an EV/Sales multiple-based illustrative relative valuation method and arrived at a target price of low double-digit (in percentage terms). The company might trade at a slight discount to its peers’ median, considering the continued negative profitability and an uptick in the debt-to-equity ratio. For the purpose of valuation, few peers like Moneyme Ltd (ASX: MME), Money3 Corp Ltd (ASX: MNY), Harmoney Corp Ltd (ASX: HMY) have been considered. Considering the expected upside in valuation & current trading levels, growth in active plans & customers, rise in TTV and the key risks associated with the business, we recommend a ‘Speculative Buy’ rating on the stock at the market price of $1.26, as on 18 August 2021, 10:25 AM (GMT+10), Sydney, Eastern Australia.

OPY 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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