Buddy Technologies Limited
BUD Details
LIFX to be Sold in U.S. Target Stores: Buddy Technologies Limited (ASX: BUD) is mainly involved in providing IoT and cloud-based solutions to its customers. As on 4 December 2020, the company’s market capitalisation stood at ~$141.03 million. The company recently announced that FIL Limited has increased its holding in the company from 9.08% to 10.17%. On 19 November 2020, the company announced that its LIFX brand of smart lights will be sold at Target Corporation’s stores in the United States. This means that over 5,000 major big-box retail store locations in the U.S. will have LIFX product on the shelf in 2021. The company has been applying the proceeds from the recent capital raise to build up its inventory position.
September 2020 Quarter Highlights: For Q1FY20, the company reported total customer revenues of $7.7 million, up 43% on the previous quarter. The total customer cash receipts for the quarter stood at $5.6 million, down by 19% on the prior quarter. Moreover, the adjusted EBITDA of the quarter stood at $32k, up from negative $1.0 million in the last quarter. As at 30 September 2020, the company had a cash balance of $2.6 million.
Customer Revenues and Cash-based Operating Expenses (Source: Company Reports)
Future Plans: The company recently passed the 3 million smart lights sold milestone and is now planning to bring in a second manufacturer to meet the scale and cost competitiveness that is needed to maintain and build upon its global market position. The company expects to be mass-producing smart lights from its second manufacturer in the first quarter of 2021.
Stock Recommendation: Over the last one month, the stock of BUD has corrected by 16.94%, and is currently trading below the average of its 52-week trading range, offering a decent opportunity for accumulation. On the technical analysis front, the stock of BUD has a support level of ~$0.036 and resistance of ~$0.077. On a TTM basis, the stock of BUD is trading at a price to book value multiple of 5.3x, lower than the industry average (Software & IT Services) of 13.3x, demonstrating that the stock might be undervalued. Considering the company’s rising customer revenues, improved EBITDA position, the growing presence of LIFX in the US retail stores, and current trading levels, we give a “Speculative Buy” recommendation on the stock at the current market price of $0.048, down by 2.041% on 4 December 2020.
BUD Daily Technical Chart (Source: Refinitiv, Thomson Reuters)
Fluence Corporation Limited
FLC Details
Repositioning of Global Business: Fluence Corporation Limited (ASX: FLC) is engaged in the delivery of innovative, cost-effective decentralised water, wastewater and reuse solutions for businesses and communities anywhere in the world. The market capitalisation of the company stood at ~$171.83 million as on 4th December 2020. Recently, the company announced that it is repositioning its global business to focus on smart product solutions, including MABR-based Aspiral™ and SUBRE as well as NIROBOX™ technology in the most attractive market segments with the objective of achieving more rapid, consistent and profitable growth. The company added that it continued the development of strategic channel distribution partners and further improvement of operational efficiencies.
Decent Growth in Top-line Performance: For the quarter ended 30th September 2020 (Q3 FY20), the company reported revenue amounting to US$15.6 million, reflecting a rise of 13% on Q3 2019 and 50% on Q2 2020. For the 12 months ended 30th September 2020, FLC recorded a rise of 95% in operating revenue to US$72.9 million. The company experienced a continuous reduction in overhead cost and recorded a fall of 16% in Q3 FY20. In the month of September 2020, the company secured a contract worth US$3.2 million, through a joint venture, the International Company for Water Services (IWS), with a semi-government utility company. The scope of work under the contract includes rehabilitation and upgrade of a 12,000 m3/day seawater reverse osmosis desalination plant in Sharm El Sheikh, Egypt.
Key Financials (Source: Company Reports)
Guidance: For FY20, the company expects its business to be EBITDA positive and revenue to be around US$32 million from Smart Product Solutions (SPS) sales. In addition, the company anticipates recurring revenue of US$9 million in FY20.
Stock Recommendation: During September 2020 quarter, the company reported a positive cash flow of US$11.1 million, after a net operating cash outflow of US$6.4 million and the drawdown of US$20 million from a finance facility with Upwell Water LLC. FLC closed the quarter with cash and cash equivalents of US$31.2 million. The stock of FLC has corrected 4.38% in the last six months. The 52-week low-high range for the stock stands at $0.170 -$ 0.480, respectively. On TTM basis, FLC has an EV/Sales multiple of 0.8x, which is lower than the industry median of 1.8x. On a technical analysis front, the stock has a support level of ~$0.252 and a resistance level of ~$0.382. Thus, considering the decent performance in Q3 FY20, contract win of US$3.2 million, repositioning of global business and key risks associated with the business, we give a “Speculative Buy” recommendation on the stock at the current market price of $0.275 on 4th December 2020.
FLC Daily Technical Chart (Source: Refinitiv, Thomson Reuters)
Aeris Environmental Ltd
AEI Details
September 2020 Quarter Highlights: Aeris Environmental Ltd (ASX: AEI) is involved in the development and marketing of proprietary, environmentally friendly technology. As on 4 December 2020, the market capitalization of the company stood at ~$82.46 million. During the quarter ended 30 September 2020, the company achieved sales of $2.9 million, which was materially impacted by the company’s delayed Aeris Active launch in the USA. For the quarter, the company reported positive operating cash flow with cash receipts of $4.75 million. Over the quarter, the company’s branded products delivered decent gross margins. At the end of the quarter, the company had a cash balance of $12.945 million and net assets of more than $18.8 million.
Quarterly Statement of Cash Flows (Source: Company Reports)
Outlook: For FY21, the company is focused on increasing its presence in China and is currently targeting partnerships with a number of large, and leading, Chinese companies. Moreover, the appointment of new distributors in the Middle East, India and Canada is expected to generate scaling annuity revenue in the new year, as these markets and distributors come fully online.
Stock Recommendation: As per ASX, the stock of AEI is inclined towards its 52-week low of $0.285, proffering a decent opportunity for accumulation. The stock of AEI gave a negative return of 42.73% in the past three months and a negative return of 22.98% in the last one month. On a technical analysis front, the stock has a support level of ~$0.285 and a resistance level of ~$0.452. Considering the current trading levels, extending market channels, modest outlook, and key risks associated with the business, we recommend a ‘Speculative Buy’ rating on the stock at the current market price of $0.340 on 4 December 2020.
AEI Daily Technical Chart (Source: Refinitiv, Thomson Reuters)
PharmAust Ltd
PAA Details
September 2020 Quarter Highlights: PharmAust Limited (ASX: PAA) is a clinical stage oncology company involved in the development of novel targeted cancer therapeutics for both humans and animals. As on 4 December 2020, the company’s market capitalisation stood at ~$36.36 million. During the September 2020 quarter, the company made a payment of $0.125 million for Research and Development, involving costs related to the development of the company’s primary drug candidate, Monepantel (MPL) and salary allocations of Dr Richard Mollard who is 100% focused on R&D activities. Over the quarter, the company received funding of $881,085 from FightMND for Phase I clinical trial in humans with Motor Neurone Disease. The company’s wholly-owned subsidiary - Epichem Pty Ltd reported revenues of $811k and a profit of $20,830 for the quarter. With a decent cash balance of $3.9 million as on 30 September, the company seems well placed to fund its current activities and will continue to demonstrate appropriate fiscal restraint.
Operating Cash Outflow (Source: Company Reports)
ONJCRI Evaluates MPL Anti-cancer Mechanisms: Olivia Newton-John Cancer Research Institute (ONJCRI) has investigated the mechanism of action of monepantel (MPL) upon cancer cells and its research and data support monepantel’s (MPL’s) safety profile on non-cancer cells. ONJCR has revealed that MPL selectively causes cancer cells to stop growing and to self-destruct.
Future Focus Areas: At the recently held AGM, the company confirmed that it plans to begin a small trial in Q1 2021 to optimise MPL dose for B-cell lymphoma in canines. It is also engaging with leading global pharmaceutical companies to commercially license MPL for anti-cancer treatments in pet animals.
Stock Recommendation: Over the last three months, the stock has corrected by 36.84% and is currently trading below the average of its 52-week trading range, offering a decent opportunity for accumulation. On the technical analysis front, the stock has a support level of ~$0.101 and resistance of ~$0.145. On TTM basis, the stock has a price to book multiple of 4.3x, lower than the industry average (Pharmaceuticals) of 9.3x. Considering the company’s decent cash balance, its plans to begin a small trial in Q1 2021 to Optimise MPL, and current trading levels, we give a “Speculative Buy” recommendation on the stock at the current market price of $0.115 on 4 December 2020.
PAA Daily Technical Chart (Source: Refinitiv, Thomson Reuters)
BrainChip Holding Ltd
BRN Details
Completion of the AkidaTM Production Design: BrainChip Holding Ltd (ASX: BRN) is a global technology company that provides ultra-low power high-performance artificial intelligence technology to its customers. As on 4 December 2020, the company’s market capitalisation stood at ~$578.19 million. BRN has pioneered a processing architecture, called Akida™, which is designed to provide a complete ultra-low power and fast AI Edge Network for vision, audio, olfactory and smart transducer applications. The company recently confirmed the completion of the AkidaTM production design by its manufacturing partner, Socionext America (SNA). SNA will now provide physical design services in preparation for production mask set and wafer fabrication at Taiwan Semiconductor Manufacturing Company (TSMC).
September 2020 Quarter Highlights: During the September 2020 quarter, the company spent US$2.2 million on operating expenses, up from US$1.9 million in the prior quarter, mainly due to expenses related to validation of the AkidaTM device and development of evaluation boards as well as public company expenses associated with significant growth in the company’s shareholder base. Over the quarter, the company entered into several agreements for its Early Access Program (EAP) including The Ford Motor Company, Valeo, Vorago Technologies and the National Aeronautics and Space Administration (NASA). The net cash outflow for operating activities stood at US$2.2 million.
Operating Cash Outflow (Source: Company Reports)
Outlook: As per Tractica report, the AI Edge market is expected to reach US$50 billion by 2025. With the unique capabilities of its Akida technology, the company is well placed to address the need of the growing AI Edge market. In 2021, Akida device design will be transferred to TSMC for use in manufacturing production wafers in support of potential customer requirements. This is a major step forward in the commercialisation the AkidaTM Neuromorphic System-on-Chip.
Stock Recommendation: As of 26 October, the company had a cash balance of US$20.3 million. Over the last three months, the stock of BRN has corrected by 28.28%, however, in the last six months, it has provided a return of 303.41%. On the technical analysis front, the stock of BRN has a support level of ~$0.316 and resistance of ~$0.472. Considering the company’s growing shareholders base, recently signed agreements for its Early Access Program, progress in the development of AkidaTM technology, and expected growth in AI Edge market, we are of the view that the stock may witness further upside in the coming times. Hence, we give a “Hold” rating on the stock at the current market price of $0.355, down by 1.389% on 4 December 2020.
BRN Daily Technical Chart (Source: Refinitiv, Thomson Reuters)
Disclaimer
The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkine.com.au and associated pages are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation. Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product. The link to our Terms & Conditions has been provided please go through them and also have a read of the Financial Services Guide. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine Pty Ltd do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as personalised advice.