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3 Tech Stocks Buzzing on ASX: DTZ, DDR, PPH

  • May 11, 2020 08:10 PM AEST
  • Hina Chowdhary
    Director, Equities Research Hina Chowdhary
    1382 Posts

    Hina Chowdhary is the Director, Equity Research at Kalkine and has an extensive experience of about 15 years in the area of Research, which includes 5+ years in Equities Research particularly.She has earned a Master of Science degree from the renowne...

3 Tech Stocks Buzzing on ASX: DTZ, DDR, PPH

COVID-19, the highly infectious virus, has hit hard almost every economy around the world, as they struggle to contain the virus spread with people asked to stay at home and businesses reducing or closing their operations.

While many companies are struggling to survive amid the coronavirus pandemic, there are several players for whom this period seems an opportunity. Whether an opportunity or a challenge, businesses are adopting measures and introducing initiatives towards business continuity while maintaining safety and health of their employees.

Australia has reported a total of 6,941 coronavirus cases, as on 11 May 2020. Out of these 6,163 people have recovered. The government has started easing few restrictions in the country. Moreover, according to discussions during the National Cabinet meeting on 8 May 2020, the government is working towards gradually removing baseline restrictions and provide a COVID-19 safe environment to Aussies.

With this backdrop, let us discuss three technology stocks that have recently released significant market updates with respect to their performance and measures amid the novel coronavirus environment.

Interesting Read: How will the ASX look post COVID-19

Dotz Nano Limited (ASX: DTZ)

Tech sector player, DTZ, boasting a market cap of A$17.46 million as on 11 May 2020, specialises in the development and marketing of carbon-based materials, targeted towards anti-counterfeiting, tracking and product-liability solutions.

DTZ and UEG Sign Commercial Agreement for Security Markers

On 11 May 2020, Dotz Nano announced to have entered into a commercial agreement valued at A$1.53 million with Universal Exports Group (UEG) for supplying its ValiDotz™ security markers. Universal Exports Group is a Hong Kong based company and its subsidiaries are engaged in product design and engineering, manufacturing, supply chain management, and China import & export trading.

As per the agreement, UEG would be purchasing 100 million of Dotz’ unique anti-counterfeiting, tracing and authenticating ValiDotz™ products, to be applied to 100 million medical face masks to ensure quality & authenticity, with the face masks designated for Government stockpiles and National Health Services usage. The non-toxic security marking solution of Dotz entails encrypted QR codes that can be read using a smartphone application and the biggest advantage is that the QR codes are almost impossible to reverse engineer.

In the first phase, ValiDotz™ products would be supplied for 30 million masks, with the remaining products due for delivery in the follow up order, subject to customer demand.

Under this agreement, Universal Exports Group would serve as the distributor (sole and exclusive) for Dotz for a 2-year period in South Africa and China for items like:

  • Face masks;
  • Medical gowns;
  • Medical gloves;
  • Other medical protective gear.

Universal Exports Group would also get access to three million unquoted options with an exercise price of A$0.048 vesting on a pro-rata quarterly basis over the term of the contract (2 years), with a term of 3 years from the date of the Agreement (options), subject to shareholder approval.

Over the terms of the agreement, the company is expected to receive A$1.53 million in revenue.

COVID-19 DVS Development in Final Stages

Development of a COVID-19 Disinfection Verification System (DVS) is in final stages. In this system, the disinfection fluid applied on any surface can be validated to make sure that there are no blind spots or overlooked areas.

Disinfection Verification System uses a Dotz detector for visualising the proper application of disinfection liquids on the surface and can be applied on surfaces like in planes, buses, trains, hospitals, buildings or any office premises.

COVID-19 Impact

DTZ, owing to COVID-19, experienced a challenging operational environment during the first three months of 2020. Due to trade and travel restrictions, its business operations were also impacted.

Despite this market volatility, the company was able to progress dialogues covering discussions with customers & prospects in oil & gas and anti-counterfeiting, wherein DTZ has finished the customisation testing with most of them. The negotiations are in advanced stages, and if finalised, they might result in long-term recurring contracts.

During the quarter ended 31 March 2020, the company received an order worth A$166,000 from Color Plastic in Switzerland.

Stock Information - DTZ stock closed the day’s trade at A$0.065 on 11 May 2020, up 10.169% from its previous close. The last one-month return of the stock was noted at 22.92%.

Dicker Data Limited (ASX: DDR)

Dicker Data Limited (ASX: DDR), boasting a market cap of A$1.15 billion as on 11 May 2020, is the top locally owned & operated distributor of ICT hardware, software, cloud & IoT solutions for reseller partners in Australia.

Dividend Announcement

On 11 May 2020, Dicker Data Limited announced a dividend payment of A$0.075 per ordinary share for period of one quarter ended 31 March 2020.

  • Ex-Date: Thursday, 14 May 2020
  • Record Date: Friday, 15 May 2020
  • Payment Date: Monday, 1 June 2020
  • DRP Election Date: Monday, 18 May 2020

A$50 Million Placement Completed

On 8 May 2020, the company announced completion of a fully underwritten institutional placement, raising approximately A$50 million via the issue of ~ 7.5 million new shares, each at A$6.70 per share.

Proceeds would offer balance sheet flexibility and aid DDR in achieving long-term growth goals such as partially funding the new distribution centre construction and investment in Dicker Data Financial Services.

SPP for Existing Eligible ANZ Shareholders

Dicker Data Limited has also announced a Share Purchase Plan (SPP), under which existing qualified shareholders of the company in Australia and New Zealand would be able to acquire new DDR shares worth up to A$30,000. Through SPP, the company plans to raise a maximum amount of A$5 million, may be dependent on scale backs & is not underwritten.

DDR amid COVID-19 Crisis – DDR has noted a surge in demand for remote working solutions across its hardware and software portfolios in recent times.

Stock Information: on 11 May 2020, DDR stock traded flat at $7.100, with a return of 12.70% in the last one month.

Pushpay Holdings Limited (ASX: PPH)

Boasting a market cap of A$1.67 billion, as on 11 May 2020, Pushpay Holdings Limited (ASX: PPH) offers a donor management system, which comprises of donor tools, finance tools as well as a custom community app, catered towards the faith sector, non-profit organisations and education providers primarily in the US. The company also focuses on other regions including Australia and New Zealand.

FY2020 Results; 32% Growth in Total Revenue

On 6 May 2020, PPH announced its FY2020 results for the period ended 31 March 2020.

  • Operating revenue increased from US$95.9 million in FY2019 to US$127.5 million in FY2020, representing a growth of 33%.
  • Total revenue stood at US$129.8 million, up by 32%.
  • Gross profit margin improved by five percentage points to 65%.
  • PBT for the period stood at US$21.7 million.
  • Net profit after tax dropped by 15% to US$16 million.
  • Operating cash flow during the period was US$23.5 million, up 953%.
  • Net cash and cash equivalents by the end of FY2020 ended 31 March 2020 stood at US$7.2 million, down 48% year on year.

FY2020 Guidance Achieved - PPH has a strong track record of delivering on guidance, and since the company got listed on ASX, it was able to meet or exceed all guidance provided to the market.

PPH during COVID-19 - Due to COVID-19, several businesses had to close their premises temporarily; however, Pushpay registered demand for mobile first technology solutions by several customers to remain in contact with their congregations. The company, which witnessed increased demand for its services in the last quarter, is well-equipped to assist its clients in utilising digital technology and driving continued congregation involvement via its mobile application.

Outlook - PPH continues to progress towards execution of its strategy to gain market share in medium-term and expects further revenue growth in the future. Presently, the company is focusing on ensuring efficiency while maintaining cost discipline across the business. Moreover, it plans on assessing further possible strategic acquisitions to add significant value to the current business and widen present proposition.

In FY2021, PPH anticipates achieving EBITDAF in the range of US$48 million to US$52 million. Also, in the long-term, the company is targeting more than 50% of the medium and large church divisions, a major opportunity for the company, as it represents annual revenue exceeding US$1 billion.

Stock Information – On 11 May 2020, PPH stock closed the day’s trade at A$6.200, up 2.479% from its previous close.

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