iCandy Interactive Limited

ICI Details

Claw Stars Enters Early Access Trial: iCandy Interactive Limited (ASX: ICI) is a developer and publisher of mobile games and online entertainment for its global customer base of over 350 million. As on 20^th January 2021, the market capitalisation of the company stood at ~$69.55 million. On 11^th January 2021, ICI announced that it is developing a new game Claw Stars in its studio as one of the 4 games to be developed in-house ahead of the time schedule and is running an early access trial in partnership with Google Play. ICI plans to trial run the game for 2-3 months and then launch it globally in more than 60 countries. Recently, one of the company’s substantial shareholder, Animoca Brands Limited reduced its voting power in the company from 9.93% to 7.37%.

Q3FY20 Results: The company recorded a 9% QoQ rise in its cash receipts from operations to $475k in September 2020 quarter, as compared to $435k in June 2020 quarter. During the quarter, ICI raised $1.25 million capital, followed by another $1.20 million from strategic investors to invest in mobile gaming and e-sports segments and marketing efforts in Asia and Australia. One of the key highlights during Q3FY20 was the launch of early access trial for the game- Masketeers on GooglePlay. ICI garnered record pre-orders of more than 1 million ever on its games’ portfolio. Within first 10 days of launch of Masketeers globally, the game surpassed management expectations and earned a revenue of $265k. During September 2020 quarter, the company used $0.163 million of cash for operating activities. It had $2.64 million of cash and cash equivalents at the end of the third quarter.

Q3FY20, Cash Flow Highlights (Source: Company Reports)

Operational Update: During November 2020, ICI launched another new game Hellopet House in partnership with Nanali Inc game studio in South Korea. The game is developed by Nanali Inc and ICI has exclusive rights for 3 years to publish the game globally. On 5^th January 2021, the company signed a definitive JV-contract with Lemon Sky Studios and incorporated a JV firm Sky Candy Sdn Bhd in Malaysia.   

Outlook: The company plans to hire its full games development team for the Malaysian office by the end of February 2021 and start working on the assigned mandate.

Stock Recommendation: The stock of ICI gave a positive return of 76.05% in the past three months and a positive return of 594.44% in the past six months. The stock is currently trading higher than the average 52-weeks price level band of $0.011 and $0.235. The stock of ICI has a support level of ~$0.117 and a resistance level of ~$0.135. On a TTM basis, the stock of ICI is trading at EV/Sales multiple of ~29.9x as compared to the industry median of ~7.9x, thus seems overvalued. Considering the stock’s significant rise in the past six months, current trading level, TTM valuation, negative ROE, and negative net margin for H1FY20, we give an “Avoid” rating to the stock at the current market price of $0.125 on 20^th January 2021.

ICI Daily Technical Chart (Source: Refinitiv, Thomson Reuters) 

Esports Mogul Limited

ESH Details

Esports Enters Mobile: Esports Mogul Limited (ASX: ESH) is engaged in the software business and esports media. It operates a pure-play digital esports tournament and a matchmaking platform, ties up with brands and holds sponsorship driven e-tournaments for online players. As on 20^th January 2021, the market capitalisation of the company stood at ~$48.91 million. The company recently announced that it is venturing into the mobile business via an application for Android and iOS. The application is currently being tested in a geo-location in South-East Asia and is getting developed for a global launch aiming at a stronger player experience and for the largest gaming segment. In a recent announcement, the company has changed its registered and principal office address to Suite 4, Level 10, 221 Queen Street, Melbourne 3000 in Australia. During 1H20, the company recorded an increase of 266.6% in revenue to $161k from $43k in 1H19.

Q3FY20 Results: During September 2020, the company received cash receipts of $0.66 million and used $0.523 million of for operating activities. It ended the quarter with a cash and cash equivalent of $1.65 million. Post the September 2020, the company entered in a key collaboration with NASDAQ-listed Super League Gaming Inc. They have decided to undertake joint business development activities in key regions and provide end-to-end solutions for brands via e-tournament activations and streaming. The company has initiated several capital raising activities and intends to use the proceeds to fund its growth (mobile application development) plans and for investment in data analytics, e-commerce, and online sales expertise. ESH strengthened its network of partners and gamers to improve company offering and has started earning revenue from these brand partnerships.

September 2020, Cash Flow Highlights (Source: Company Reports)

Outlook: The company foresees smartphones as the leading devices for online gaming and has estimated the revenue from mobile gaming. With the successful testing and launch of its native mobile App, ESH plans to progress into the mobile gaming segment. It also aims to expand its global presence and improvise its business model in FY21.

Stock Recommendation: The stock of ESH gave a positive return of 28.57% in the past three months and a positive return of 300% in the past six months. The stock is currently trading slightly above its 52-weeks’ average of $0.003-$0.031. The stock of ESH has a support level of ~$0.016 and a resistance level of ~$0.019. On a TTM basis, the stock of ESH is trading at a  Price to Book Value multiple of ~11.4x as compared to industry average of ~14.0x. Considering the improved top line in 1H20 vs 1H19, strong cash position expected post capital raising of $5 million (and $3 million expected as aforesaid), debt-free balance sheet, decent current trading volume and levels, we give ‘Speculative Buy’ rating on the stock at the current market price of $0.018, up by 5.882% on 20^th January 2021.

ESH Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

Aspermont Limited

 ASP Details

Secondary Listing on Frankfurt Stock Exchange: Aspermont Limited (ASX: ASP) is engaged in the online media distribution for B2B via its commercial model. It caters dominantly to the resources industry besides energy, agriculture, and technology sectors. It has a global presence with offices in UK, Brazil, Australia, and others. As on 20 January 2021, ASP has a market capitalisation of $32.32 million. In a recent announcement, the company informed the market about its secondary listing on the Frankfurt Stock Exchange (FSE). With this, it aims to reach out to more international firms in the energy & mining sector, a more established German media sector and for a better dividend on its valuation metrics and growth initiatives for FY21. ASP has not issued any new additional shares for this listing as ASX is approved by FSE.

FY20 Result Highlights: The company reported a fall in revenue by 7% YoY to $15.2 million for FY20. This was due to the major fall (65%) in revenue due to postponements from the events segment. Its normalized EBITDA went up by 140% to $1.2 million during FY20. ASP recorded a net loss of $0.9 million in FY20 vs $7.5 million in FY19. The company ended the year with cash and cash equivalents of $2.64 million.

FY20 Financial Highlights (Source: Company Reports)

Outlook: The company expects to receive the pre-booked revenue of FY20 flowing into FY21. It also estimates to receive revenue generated from the newly launched VEE division in FY21. 

Stock Recommendation: The stock of ASP gave a positive return of 150% in the past three months and a positive return of 87.5% in the past six months. The stock is currently trading above at its 52-weeks’ average of $0.0059-$0.021. The stock of ASP has a support level of ~$0.014 and a resistance level of ~$0.016. On a TTM basis, the stock of ICI is trading at price to book value multiple of ~9.9x as compared to industry (Media & Publishing) median of ~1.2x and is thus overvalued. Considering the stock’s decent returns in the past few months, TTM valuation, negative ROE, we are of the view that the stock might have factored in most of the positives of the company. We suggest investors to wait for better entry levels and give an ‘Expensive’ rating on the stock at the current market price of $0.015, up by 7.142% on 20^th January 2021.

ASP Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

Applyflow Limited

AFW Details

Cancellation Of 33.33 Million Performance Options: Applyflow Limited (ASX: AFW), previously known as Nvoi Limited (NVO), provides cloud-based staffing solution via Software as a Service and e-marketplace to recruiters and candidates. As on 21^s January 2021, the market capitalisation of the company stood at ~$16.25 million. On 4^th January 2021, the company announced lapse and cancellation of 33.33 million performance options. During November 2020, JXT, a subsidiary of AFW, entered in a 3-year contract with Persolkelly for providing recruitment website management and professional services for a fixed fee income.

September 2020 Result Highlights: During Q1FY21, the company registered the highest cash earnings of $1.013 million, up from $471k in Q4FY20. AFW finished an operational restructuring following the purchase of JXT and realised close to $2 million annualised savings in cost during the quarter. During the quarter, AFW introduced a new platform - ApplyFlow and is witnessing customer traction. During September 2020 quarter, the company incurred cash outflow of $0.833 million for operating activities. It had cash and cash equivalents of $4.37 million at the end of the quarter.

Q1FY21, Cash Flow Highlights (Source: Company Reports)

Outlook: The company has a robust pipeline of key customer contracts. It aims to on-board medium to big-sized firms as customers with recruitment needs and in-house HR recruitment personnel in FY21.

Stock Recommendation: The stock of AFW gave a negative return of 18.18% in the past three months and a negative return of 35.71% in the past six months. The stock is currently trading below its 52-weeks’ average of its trading range of $0.0048-$0.0192. The stock of AFW has a support level of ~$0.005 and a resistance level of ~$0.013. On a TTM basis, the stock of AFW is trading at price to book value multiple of ~3x as compared to industry (Professional & Commercial Services) median of ~2.7x, thus seems overvalued. Considering the valuation on TTM basis, negative ROE, current trading volume (low), volatility in the stock, we give an ‘Avoid’ rating on the stock at the current market price of $0.009 on 20^th January 2021.

AFW Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

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