Stocks’ Details

Integrated Research Limited

FY21 Performance Update: Integrated Research Limited (ASX: IRI) is engaged in the business of design, development and sale of computer software. As per a recent announcement, the company has declared its FY21 results. Sales were driven by new product launches and execution in the second half of the year, following a subdued H1FY21 performance.

• Revenue decreased by ~29% to $78.5 million in FY21, compared to FY20. This was due to deferrals in deals and a cautious approach in buying behaviour in the first half.
• Cash receipts from customers were at $78.8 million during the period.
• NPAT stood at $7.9 million during the year.
• Net cash increased by ~16% to $5.5 million in FY21, compared to FY20.

Trend in Revenue (Source: Analysis by Kalkine Group)

Key Risks: The company is exposed to foreign currency fluctuations which can impact the bottom-line profitability.

Outlook: The company has continued with its strategy of the launch of new cloud-based products and expects to drive long term growth and recurring subscription revenues. Customers have licensed these solutions in order to support their Teams & Zoom platforms. It has also released a new solution for Webex in June 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 extended its partnership with ACI Worldwide in order to enhance omni-channel payment analytics capabilities. As per ASX, the stock of IRI is trading below its average 52-weeks’ levels of $1.740-$4.260.   The stock of IRI gave a positive return of ~5.82% in the past one month and a negative return of ~51.69% in the past one year. 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 decrease in revenue and the presence of foreign currency risk. For the purpose of valuation, few peers like TechnologyOne Ltd (ASX: TNE), ELMO Software Ltd (ASX: ELO), Iress Ltd (ASX: IRE) have been considered. Considering the expected upside in valuation & current trading levels, uptick in performance in H2FY21, increase in net cash and the key risks associated with the business, we recommend a ‘Speculative Buy’ rating on the stock at the current market price of $1.955, as on 02 September 2021, 10:30 AM (GMT+10), Sydney, Eastern Australia.

IRI Daily Technical Chart, Data Source: REFINITIV

Vortiv Limited

FY21 Business & Performance Update: Vortiv Limited (ASX: VOR) holds a non-controlling interest in TSI India, which is a business network of bank automated teller machines and bill payment systems. It has recently updated about its FY21 performance.

• During FY21 it had interests in operations of Decipher Works Pty Ltd, which is a cyber security specialist and Cloudten Industries Pty Ltd, which is a cloud and cloud security specialist. However, effective 16 December 2020 it had sold 100% of the shares of DWX and C10 to CyberCX Pty Ltd for a consideration of $25 million.
• It reported a profit of $9.7 million on the sale of the stake in DWX and C10.
• The company reported total operating profit after tax at $10.4 million in FY21, compared to $2.3 million in FY20.
• The management declared a dividend of 5.55 cents per share, which was paid on 9 April 2021. The total dividend amounted to $7.8 million.

Trend in Cash & Equivalents (Source: Analysis by Kalkine Group)

Key Risks: The company’s business model is prone to the risks of making losses in the invested businesses. This can impact the overall profitability of the Group.

Outlook: The company is focused on seeking acquisition opportunities and looking for transaction opportunities.

Stock Recommendation: As per ASX, the stock of VOR is trading below its average 52-weeks’ levels of $0.035-$0.250. The stock of VOR gave a negative return of ~7.69% in the past one month and a positive return of ~7.87% in the past nine months. On a TTM basis, the stock of VOR is trading at a P/BV multiple of 0.2x, lower than the industry median (Technology) of 4.4x, thus seems undervalued. Considering the valuation on TTM basis & current trading levels, increase in operating profit, payments of dividend, and the key risks associated with the business, we recommend a ‘Speculative Buy’ rating on the stock at the current market price of $0.036 as on 02 September 2021, 01:47 PM (GMT+10), Sydney, Eastern Australia.

VOR Daily Technical Chart, Data Source: REFINITIV 

IOUpay Limited

Operational Update: IOUpay Limited (ASX: IOU) provides software-based mobile telecommunications and technology business in the Asia-Pacific region.  As per a recent announcement, the company has given an update on its business operations and BNPL offering.

• The company has reported an uptick in BNPL service offering with myIOU BNPL transactions completed in the first half of the September Quarter.
• $2,906,253 in TTV has been transacted during 1 July to 16 August, which delivered $250,666 in Net Transaction Revenues.
• It has also reported growth in consumer and merchant sign-ups during the period.

The company has reported an improvement in its revenue by ~12% to $7.18 million in FY21. Net loss for the period stood at $4.94 million.

Trend in Revenue (Source: Analysis by Kalkine Group)

Reinstatement to Official Quotation: On 18 August 2021, the company has updated that the suspension of trading in securities has been lifted following the outcome of its application to the Federal Court of Australia for relief under section 1322 of the Corporations Act 2001 (Cth) in respect of an issue of shares on 3 March 2020.

Key Risks: The company’s line of business makes it prone to the risk of technological changes, and hence it has to look to keep its products and software’s updated with the latest technological trends.

Outlook: The company expects to complete the testing of integration between RMS and IOUpay systems by early September. The company is also focused on its digital marketing campaign and has targeted key cultural demographic groups in Malaysia. In this regard, it has developed a portfolio of social media influencers in order to drive brand awareness and engagement with the myIOU service offering.

Stock Recommendation: The company has signed award-winning international singer-songwriter, Yuna as the face of myIOU. As per ASX, the stock of IOU is trading below its average 52-weeks’ levels of $0.045-$0.850.   The stock of IOU gave a positive return of ~67.64% in the past nine months and a negative return of ~42.99% in the past six months. On a TTM basis, the stock of IOU is trading at a P/BV multiple of 10.5x, lower than the industry average (Investment Banking & Investment Services) of 14.2x, thus seems undervalued. Considering the valuation on TTM basis & current trading levels, uptick in BNPL service offering, growth in consumer & merchant sign-ups, increased traction in its digital marketing campaign and the key risks associated with the business, we recommend a ‘Speculative Buy’ rating on the stock at the current market price of $0.275, as on 02 September 2021, 10:30 AM (GMT+10), Sydney, Eastern Australia.

IOU 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.

Note 3: IOUpay Limited (Company) is a client of Kalkine Media Pty Ltd (Kalkine Media), an affiliate of Kalkine. However, under no circumstances have Kalkine or its related entities been, directly or indirectly influenced in making any recommendation concerning Company as contained in this report, and no form of compensation is or will be received by Kalkine, Kalkine Media or Kalkine’s other related entities for the publication of this report.

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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