Whispir Limited

WSP Details

 Q1FY22 (Ending 30 September 2021) Highlights: Whispir Limited (ASX: WSP) is a developer and provider of communications management systems via a cloud-based SaaS (Software-as-a-Service) platform.

• The company reported an increase of ~8% YoY in the Annualised Recurring Revenue (ARR) to ~$56.8 million, driven by trends of digitisation and growing demand for communications intelligence.
• The customer base expanded with the addition of ~33 new customers in Q1FY22, bringing the total customers to ~834, up by ~25.4% on Q1FY21.
• The twelve-month customer revenue retention stood at ~117.2%, depicting robust product satisfaction levels from customers.
• The cash receipts from customers amounted to ~$16.3 million, a ~55.7% YoY rise in Q1FY22, due to strong underlying growth.
• WSP exited Q1FY22 with a cash and equivalents balance of ~$43.9 million.
  

ARR Highlights; (Analysis by Kalkine Group)

Key Risks: The company faces the risk of change in customers’ buying behaviour, preferences, and supplier concentration. Forex headwinds, COVID-19 uncertainties, peer competition might also disrupt the business and impact the financial performance.

Outlook:

• WSP will focus on growing customer base, platform usage, and revenue in the Asia Pacific, North America as per its long-term growth strategy.
• The company provides ARR guidance of ~$65.4 - $70.0 million, up by ~22-31% YoY for FY22.

WSP expects revenue to be up by 20-26% YoY to ~$57.2- $60.2 million and EBITDA loss between $13- $15.5 million for FY22.

• The R&D spend is expected to increase by ~70-80% on pcp to ~$17-18 million in FY22.
• The company will hold an online AGM (Annual General Meeting) on 24 November 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 stock of WSP gave a positive return of ~3.25% in the past three months and a positive return of ~13.69% in the past six months. The stock is currently trading close to its 52-weeks’ low level of $2.070. The stock has been valued using the Enterprise Value to Sales based illustrative relative valuation method and arrived at a target price of low double-digit upside (in % terms). The company might trade at a slight discount than its peers’ mean EV/Sales multiple, considering its cash outflows, expected increase in the R&D spend in FY22, continuing net loss, and negative ROE in FY21. For this purpose of valuation, a few peers like Readytech Holdings Limited (ASX: RDY), Ansarada Group Limited (ASX: AND), Nuix Limited (ASX: NXL) have been considered. Considering the current trading levels, growth in cash receipts, higher ARR, robust customers in Q1FY22, FY22 forecasted ARR & revenue growth, valuation, and associated key business risks, we give a ‘Speculative Buy’ rating on the stock at the current market price of $2.080, as of 16 November 2021, 11:27 AM (GMT+10), Sydney, Eastern Australia.

WSP Daily Technical Chart, Data Source: REFINITIV  

Resonance Health Limited

RHT Details

 FerriSmart® Access Initiative Highlights: Resonance Health Limited (ASX: RHT) develops and commercialises technologies and services for the analysis of radiological images. Its AI-based portfolio includes FerriSmart®, HepaFat-AI®, and LiverSmart™ products. On 12 November 2021, RHT signed a Patient Access agreement for the distribution of its FerriSmart® with the WHO (World Health Organization) associated Thalassaemia International Federation (“TIF”).

• As per the contract, TIF will deploy 500 FerriSmart® vouchers in the economically weaker nations in Asia, Europe, and West Pacific for the thalassaemia patients.
• RHT will use the data gathered from the FerriSmart® Access Initiative for product improvements in its offerings, subject to pertinent laws.
• Initially, the agreement is for 12 months starting December 2021. At that time, RHT and TIF will jointly evaluate the outcome and uptake of FerriSmart® in the new markets.

Q1FY22 (Ending 30 September 2021) Results:

• Robust Demand: On a CYTD (calendar year-to-date) basis, the chargeable analysis service volumes increased by ~18% YoY and 5% up on 2019. RHT witnessed robust underlying demand for its products and services and sales volumes surpassing 2020 and 2019 pre-COVID levels.
• Receipts & Outflows: The company received ~$708,000 cash receipts from customers and recorded ~$334,000 of net cash outflows in Q1FY22.
• Team Expansion: The company appointed Mr. Ajay Nair as the new General Manager for Global Sales & Marketing and hired a new CTO. In the US, RHT has started the hiring of a dedicated global salesforce with the addition of a US Sales Manager, Global Marketing Manager, and US-based Clinical Trials Specialist, along with the new sales representatives for India, South Korea, and the UK.

Sales Revenue & Net Income from FY18-FY21; (Analysis by Kalkine Group)

Key Risks: The company faces restricted access to patients due to COVID-19 lockdowns, risk of failure of clinical trials, and customer concentration. RHT also faces the financial impact of forex rate changes.

Outlook:

• The company will hold an Annual General Meeting on 25 November 2021.
• RHT is undergoing final checks for its newly developed AI medical device, LiverSmart™ for submission to the US regulatory authorities’ clearance.
• RHT prioritises establishing a high-profile global sales and marketing team to build market awareness and revenue growth. It aims to tap new market customers with the disease prevalence and aptitude for software-based diagnosis. Besides, RHT aims to expand its existing customer base of HepaFat-Scan® and FerriScan® customers.
• RHT continues to collaborate with Key Opinion Leaders (KOLs) worldwide for research publications and visitation at global conferences. It also seeks to grow partnerships with pharma firms to utilise its products as companion diagnostics in current and future clinical trials.

Stock Recommendation: The stock of RHT gave a negative return of ~25.92% in the past three months and a negative return of ~47.36% in the past six months. The stock is currently trading lower than the 52-weeks’ average price level band of $0.080 - $0.325. On a TTM basis, the stock of RHT is trading at a price to book value multiple of 3.9x, lower than the industry (Healthcare Equipment & Supplies) average of 6.1x, thus seems undervalued. Considering the current trading levels, robust demand for portfolio products, new partnerships, low debt levels, submission of LiverSmart™ application for the US FDA approval, valuation on a TTM basis, and associated key business risks, we give a ‘Speculative Buy’ rating on the stock at the current market price of $0.100, as of 16 November 2021, 10:58 AM (GMT+10), Sydney, Eastern Australia.

RHT 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.

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