Flexiroam Limited

FRX Details

Spotlight on Q4FY22 (Ended 31 March 2022): FlexiAroam Limited provides telecommunications services globally with a network of ~580 operators in more than ~180 geographies.

• FRX posted ~96% Y-o-Y revenue growth to ~$1.2 million and ~131% Y-o-Y rise in cash receipts in Q4FY22 driven by growth across its key operational metrics (subscribers, active users, data sold, billed SIMs, etc.).
• The company entered multiple long-term contracts with companies such as Seven7 Perfection, Pine Labs, and Razer Merchant Services to offer connectivity to mPOS (mobile point-of-sale) devices.

Growth in Key Operational Metrics; (Analysis by Kalkine Group)

Key Risks: The company faces the risk of evolving technological landscape, customer acquisition growth, new product/category launches, and a larger market share amidst growing peer competition.

Outlook: FRX product teams will focus on enhancing the client experience, backend stability, and data cost reduction for substantial growth in Q1FY23. Client onboarding and development of product suite will remain a priority as FRX plans to expand across verticals and use cases. FRX plans to conduct AGM for FY22 on 20 June 2022.

Stock Recommendation: The stock of FRX gave a negative return of ~20.83% in the past three months and a negative return of ~7.31% in the past six months. The stock of FRX is currently trading lower than the 52-weeks’ average price level band of $0.023 - $0.059. On a TTM basis, the stock of FRX is trading at an EV/Sales multiple of ~9.1x compared to the industry (Telecommunications Services) average of ~11.2x, and thus seems undervalued. Considering the current trading levels, revenue growth across Travel & Solutions segments and improved operational metrics in Q4FY22, several new customer deals signed, focus on scalable eSIM opportunities and penetrating deeper in mPOS into South-East Asia, valuation on a TTM basis, and associated key business risks, we give a ‘Speculative Buy’ rating on the stock at the closing market price of $0.038, down by ~5.00%, as of 3 May 2022. Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

FRX Daily Technical Chart, Data Source: REFINITIV  

Cellnet Group Limited

CLT Details

Result Highlights of 1HFY22 (Ended 31 December 2021): Cellnet Group Limited (ASX: CLT) is involved in the distribution of gaming technology accessories (tablet, mobile phone, notebook/hybrid accessories) in Australia and New Zealand. Cellnet and Turn Left Distribution are its core segments.

• On 25 October 2021, CLT signed a strategic sourcing contract with Queensland based Renewable Mobile Group (RMG) to seek access to locally refurbished iPads, iPhones, and other mobile devices to feed its retail and online channels. The alliance has contributed to Q3FY22 revenue as well.
• CLT reported a ~21% Y-o-Y increase in online sales (including refurbished devices) in 1HFY22 via a mix of its marketplaces in New Zealand and Australia and its flagship Techunion store.
• CLT declared an interim dividend of ~$0.003 per share in 1HFY22 versus nil dividend in

Comparative Financial Performance; (Analysis by Kalkine Group)

Key Risks: The company faces growing peer competition, expansion in existing and new markets, supply chain challenges, and the COVID-19 led store closure risk.

Outlook: The refurbished device category is perceived to be highly synergistic for CLT and is surfacing as a high growth segment. CLT plans to extend its collaboration with RMG into the New Zealand market in Q4FY22.

Stock Recommendation: The stock of CLT gave a negative return of ~43.33% in the past three months and a negative return of ~46.03% in the past six months. The stock is currently trading at par to its 52-weeks’ low level of ~$0.034. On a TTM basis, the stock of CLT is trading at an EV/Sales multiple of ~0.2x, lower than the industry (Specialty Retailers) median of ~1.1x, and thus seems undervalued. Considering the current trading levels, new partnership agreement with RMG and expected expansion in New Zealand market, growth in digital sales, emergence of refurbished device category as a growing segment, valuation on a TTM basis, and associated key business risks, we give a ‘Speculative Buy’ rating on the stock at the closing market price of $0.034, down by ~8.108%, as of 3 May 2022. Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

CLT Daily Technical Chart, Data Source: REFINITIV

Note 1: The reference data in this report has been partly sourced from REFINITIV.

Note 2: Investment decision 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 Valuation has been achieved and subject to the factors discussed above. 

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.

Disclaimer - This report has been issued by Kalkine Pty Limited (ABN 34 154 808 312) (Australian financial services licence number 425376) (“Kalkine”) and prepared by Kalkine and its related bodies corporate authorised to provide general financial product advice. Kalkine.com.au and associated pages are published by Kalkine.

Any advice provided in this report is general advice only and does not take into account your objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your objectives, financial situation and needs before acting upon it.

There may be a Product Disclosure Statement, Information Statement or other offer document for the securities or other financial products referred to in Kalkine reports. You should obtain a copy of the relevant Product Disclosure Statement, Information Statement or offer document and consider the statement or document before making any decision about whether to acquire the security or product.

You should also seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice in this report or on the Kalkine website. Not all investments are appropriate for all people.

The information in this report and on the Kalkine website has been prepared from a wide variety of sources, which Kalkine, to the best of its knowledge and belief, considers accurate. Kalkine has made every effort to ensure the reliability of information contained in its reports, newsletters and websites. All information represents our views at the date of publication and may change without notice.

Kalkine does not guarantee the performance of, or returns on, any investment. To the extent permitted by law, Kalkine excludes all liability for any loss or damage arising from the use of this report, the Kalkine website and any information published on the Kalkine website (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine hereby limits its liability, to the extent permitted by law, to the resupply of services.

Please also read our Terms & Conditions and Financial Services Guide for further information.

On the date of publishing this report (referred to on the Kalkine website), employees and/or associates of Kalkine and its related entities do not hold interests in any of the securities or other financial products covered on the Kalkine website unless those persons comply with certain safeguards, procedures, and disclosures.

Kalkine Media Pty Ltd, an affiliate of Kalkine Pty Ltd, may have received, or be entitled to receive, financial consideration in connection with providing information about certain entity(s) covered on its website.