Airtasker Limited

ART Details

Airtasker Limited (ASX: ART) was incorporated in 2011. It provides an online community marketplace platform to connect people who require to outsource tasks and services and the ones who deliver the same services.

1QFY22 Updates:

• Gross Marketplace Volume: Despite the lockdown, its GMV increased by ~6.2% Y-o-Y and was reported as ~$ 35 million in 1QFY22, owing to strong growth in the UK (Pcp basis).
• Use of Funds: The company is spending on track with the unaudited expenditure of ~$ 1.6 million till 30^th September 2021 for marketing (including international) out of the budget of ~$ 8 million.
• Cash Position: The cash outflow from operating activities increased and was reported as ~$4.08 million for 1QFY22, mainly because of ramping up of marketing investment. With the cash receipts of ~$ 6.54 million, it closed its quarter with the cash balance of ~$40.18 million at the end of 30^th September 2021 versus ~$45.86 million at the end of 30^th June 2021.

Cash Balance Highlight (Source: Analysis by Kalkine Group)

Key Risks:

• COVID-19 and Omicron: The company is vulnerable to the risks associated with the impacts of COVID19 and lockdown due to the new variant Omicron, which might further reduce its operations.
• Demand & Supply Gap: The company’s business is dependent on the provision of skilled workers to the people who are in need. The gap between the quantity and quality of demand and supply of the workforce might affect its popularity and usage.
• Seasonal Effect: The company has cyclical effects arising from the seasons and might face a slowdown in winters as compared to summers.
• Technology Risks: Running a business online has its challenges related to the technology used and their regular upgradation. Failure to which or glitches in the system could lead to operational risks of lower efficiencies and temporary halts, thereby affecting its revenue.

Outlook:  The integration with Zaarly and US expansion is under process. Where the Australian market has witnessed seasonal growth, in contrast, its Northern hemisphere marketplaces in US & UK are expected to face seasonal slowdown due to winters.

Valuation Methodology: EV/Sales Multiple Based Relative Valuation (Illustrative)

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 stock of the company has been corrected by ~52.85% in the past nine months. Currently, the stock is trading lower than the average of its 52-week low and high levels of $0.805 and $1.965, respectively. The stock has been valued using the EV/Sales multiple based illustrative relative valuation method and arrived at a target price with an upside of low double-digit (in % terms). After considering the expected cyclical effects related to COVID-19 and seasonal impact internationally, the company can trade at a slight discount to its peers. For the purpose of its valuation, peers like Seek Ltd (ASX: SEK), Carsales.Com Ltd (ASX: CAR), and Domain Holdings Australia Ltd (ASX: DHG) have been considered. Considering the company’s focus on 1QFY22 updates, current trading levels, indicative upside in the valuation, and key risks associated with the business, we give a “Speculative Buy” rating on the stock at the current market price of $0.820, 12:36 PM (GMT+10), Sydney, Eastern Australia, as on 22^nd December 2021. 

ART Daily Technical Chart, Data Source: REFINITIV 

SelfWealth Limited 

SWF Details

SelfWealth Ltd ASX: SWF) was incorporated in 2011, and it provides online trading services on a flat fee basis to the Australian and US markets. As per the notice issued on 21^st December 2021, a total of 6,183,181 were issued as performance rights.

1QFY22 Updates:

• Awards: As per its quarterly report, SWF has won Finder Investment Awards 2021 for Best Australian Share Trading Account and Best Share Trading Platform (in the long-term).
• Quarterly Revenue: With an increase of ~86% Y-o-Y in active traders, its operating revenue rose by ~32% Y-o-Y and was reported as ~$5.5 million in 1QFY22 versus ~$4.2 million in 1QFY21.
• Cash Position: The cash outflow from operating activities appeared as ~$1.1 million for its 1QFY22, owing to the focus on investing in aggressive growth strategies. With the cash receipts of ~$ 5.48 million, it closed its quarter with a cash balance of ~$17.54 million at the end of 30^th September 2021 versus ~$7.52 million at the end of 30^th June 2021.

Cash Balance Highlight (Source: Analysis by Kalkine Group)

Key Risks:

• Technology Risks: Having its business online, it is majorly dependent on the technology used and their regular upgradation. Failure to which or glitches in the system could lead to operational risks.
• Competition Risk: The online platform industry SWF works in has stiff competition, which is prone to lost opportunities due to the new entrants and the existing players.
• Currency Risk: Having its business internationally causes it to face currency risks.

Outlook: With the aim of providing financial freedom to people and giving them an opportunity to create wealth through the diversified portfolio to retail investors, SWF indulged in aggressive marketing initiatives and product development. A placement offer of ~$ 11.74 million was raised to let the approach flow throughout FY22. Having SWF being termed as no. four in the online broking market in Australia by an independent market research firm – Investment Trends, its introduction in the cryptocurrency and new international market is on the cards for 2QFY22.

Stock Recommendation: The stock of the company has given a negative return of ~35.86% in the past six months. Currently, the stock is trading below the average of its 52-week low and high levels of $0.275 and $0.795, respectively. On a TTM basis, the stock of SWF is trading at an EV/Sales multiple of 3.5x, lower than the industry’s mean (Investment Banking and Investment Services) of 10.4x, thus seems to be undervalued. Considering the growth strategies in-line, current trading levels, valuation on a TTM basis, 1QFY22 performance and key risks associated with the business, we recommend a ‘Speculative Buy’ rating on the stock at the current market price of $0.275, 10:30 AM (GMT+10), Sydney, Eastern Australia, as on 22^nd December 2021.

SWF 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 for 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 is 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 the 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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