PainChek Limited
Received Approval from Health Canada: PainChek Limited (ASX: PCK) is a developer of pain assessment technology for aged adults unable to express their problems and children who have not yet started speaking. As on 29th December 2020, the market capitalisation of the company stood at ~$87.89 million. Painchek recently held an AGM and reported that all the resolutions placed during the meeting were passed. PCK has recently received regulatory approval and license from Health Canada to operate in the $5 billion in-home Canadian health market. It plans to seek clients from the next quarter. PCK has extended its present relationship with AlayaCare to offer marketing assistance and lead generation in Australia and Canada.
September 2020 Quarter Update: For September 2020 quarter (Q1FY21), the company reported total revenue of $750K. During the quarter, PCK executed new agreements with Nulsen Group and Ramsey Hospital Research. As at 30 September 2020, the company had 795 Residential Aged Care (RAC) Facilities and 66,887 approved beds under annual PainChek® license. The normalised contracted ARR from total beds under license equated to $2.79 million in the second year of contract with the client, reflecting a rise of 323% over the previous year.
Contracted ARR (Source: Company Reports)
Outlook: In the December 2020 quarter, the company expects to witness an increase in its pipeline that will lead to spending decisions increasing into Q1 CY2021. The company plans to use the proceeds of the recent private placement to accelerate international growth opportunities and to develop new products.
Valuation Methodology: EV/Sales Multiple Based Relative Valuation (Illustrative)
EV/Sales Multiple Based Relative Valuation (Source: Refinitiv, Thomson Reuters)
Note: All forecasted figures and peers have been taken from Thomson Reuters, NTM-Next Twelve Months
Stock Recommendation: The company posted a healthy cash balance of $13.8 million as on 30 September 2020. The stock of PCK gave a negative return of 13.18% in the past three months and a negative return of 31.30% in the past six months. The stock is inclined towards its 52-weeks’ low level of $0.061. The stock of PCK has a support level of ~$0.067 and a resistance level of ~$0.108. We have valued the stock using an Enterprise Value to Sales multiple based illustrative relative valuation method and have arrived at a target price of low double-digit upside (in % terms). For the purpose, we have taken peers like ResApp Health Ltd (ASX: RAP), Osprey Medical Inc (ASX: OSP), ImpediMed Limited (ASX: IPD) and others. Considering the current trading levels, decent Q1FY21 performance, modest outlook, and valuation, we give a ‘Speculative Buy’ rating on the stock at the current market price of $0.079, up by 1.282% on 29th December 2020.
ResApp Health Limited
Launches SleepCheck on Android Devices: ResApp Health Limited (ASX: RAP) is an e-health player offering diagnosis and management of respiratory disease via smartphone application. It applies machine learning algorithms to diagnose and assess respiratory conditions. As on 29th December 2020, the market capitalisation of the company stood at ~$60.64 million. The company recently announced the launch of its direct-to-consumer smartphone app, SleepCheck, for the self-assessment of sleep apnoea, on select Android devices. The app is now available for download on selected Android devices.
Terminated MOU with RB to Co-Develop the App: The company recently announced the termination of its MOU with RB for developing a mobile application together using ResApp’s cough driven algorithms. The termination was due to the inability of both parties to reach a consensus on the scope and timeline of a co-development program.
September 2020 Quarter Results: The company garnered receipts amounting to $3,000 from the customers during Q1FY21, due to the company only receiving payment from Apple for SleepCheck downloads during the slower downloaded months of June and July. It had a cash balance of $5.8 million at bank closing 30 September 2020. ResAppDx has partnered with telehealth companies such as Coviu and Phenix Health and will add more partners via service agreements in the coming months. SleepCheck application is accessible in 36 countries and has been floated on a few Android devices such as Samsung Galaxy S10, S20 and S9. The amount of net cash used in operating activities stood at $1.44m. RAP garnered $1.525m as proceeds from the exercise of options, $196,000 via government aid due to COVID-19 situation. Post the September quarter, RAP has completed a license contract with AstraZeneca K.K. (Japanese subsidiary) to use ResApp’s cough counting cell application on a trial of patients currently being treated for lung cancer.
SleepCheck Downloads Trend (Source: Company Reports)
Outlook: RAP is positive about the growth of downloads for the SleepCheck’ app for the current period, especially due to the marketing in the UK and higher partnerships with local and global partners. The firm is also looking to meet the FDA to speed-fast the approval of a pre-submission package filed for SleepCheck’s usage in the US.
Valuation Methodology: EV/Sales Multiple Based Relative Valuation (Illustrative)
EV/Sales Multiple Based Relative Valuation (Source: Refinitiv, Thomson Reuters)
Note: All forecasted figures and peers have been taken from Thomson Reuters, NTM-Next Twelve Months
Stock Recommendation: The stock of RAP gave a negative return of 19.04% in the past three months and a negative return of 51.42% in the past six months. The stock is inclined towards its 52-weeks’ low level of $0.055. The stock of RAP has a support level of ~$0.056 and a resistance level of ~$0.123. We have valued the stock using an Enterprise Value to Sales multiple based illustrative relative valuation method and have arrived at a target price of low double-digit upside (in % terms). For the purpose, we have taken peers like Volpara Health Technologies Limited (ASX: VHT), Sonic Healthcare Limited (ASX: SHL), PainChek Limited (ASX: PCK) and others. Considering the current trading levels, growth of ResAppDx (new version, new partnerships) and SleepCheck’s growth of downloads and new partnerships during Q1FY21, and valuation, we give a ‘Speculative Buy’ recommendation on the stock at the current market price of $0.085, up by 6.250% on 29th December 2020.
Urbanise.Com Limited
Issue of Ordinary Shares Announced: Urbanise.Com Limited (ASX: UBN) is a technology firm offering cloud-based software services to Strata, Facilities Management and Utilities industries. As on 29th December 2020, the market capitalisation of the company stood at ~$60.84 million. On 1st December 2020, UBN announced the issue of 1.14 million fully paid ordinary shares following the exercise of options issued in relation to the Deed of Settlement on 04th September 2018. Recently, one of the company’s substantial holders, Jencay Capital Pty Ltd, raised its holding in the company from 5.11% to 6.49%.
Q1FY21 Results & Activities: The revenue for September 2020 quarter rose by 21.7% to $2.75 million on pcp basis. UBN’s recurring license revenue increased by 12.6% YoY to $2.07 million due to rise in Facilities Management (FM) and Strata license fees. UBN collected total cash receipts of $2.56 million in Q1FY21 and the net cash outflow for the quarter was $1.18 million. Over the quarter, the company raised $6.8 million issuing, 87 million new fully paid shares at 7.8 cents per share through corporate investors. The proceeds will be used for organic growth of ARR via sales & marketing efforts and product development. The closing cash balance was $3.36 million for the quarter with no significant debt on its balance sheet.
September 2020 Cash Flow Highlights (Source: Company Reports)
Outlook: The company gained several new customers for FM for Q1FY21 and is progressing on track for completing PICA execution in FY2021. It aims to continue leading in the cloud-based strata platform and plans to convert backlog customers to billable ones during FY21.
Stock Recommendation: The stock of UBN gave a negative return of 8.74% in the past three months and a positive return of 14.06% in the past six months. The stock of UBN has a support level of ~$0.054 and a resistance level of ~$0.91. On a TTM basis, the stock of UBN is trading at a price to book value multiple of 5.2x, lower than the industry average (Software & IT Services) of 13.2x, and thus seems undervalued. Considering the rising top-line, increase in sales and license revenue of FM solutions over past 6 months, macro-trends and multiple growth enablers favouring the growth of FM, and valuation, we give a ‘Speculative Buy’ rating on the stock at the current market price of $0.076, up by 4.109% on 29th December 2020.
Comparative Price Chart (Source: Refinitiv, Thomson Reuters)
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