Growth and Diversified Exposure in Tech Space: GTK, SKO, CAT, RHP, NET

  • Dec 05, 2019 AEDT
  • Team Kalkine
Growth and Diversified Exposure in Tech Space: GTK, SKO, CAT, RHP, NET

In the contemporary era, we cannot imagine a world without technology. Technology has now made its presence felt in almost every segment, sector or industry. Technology is the application of the knowledge, science as well as skills to find the solution which fulfils the requirement of an individual and organisation.

The application of technology is increasing day by day, and we use technology to get the work done in our daily lives. Similarly, organisations also use various technologies to execute their work, save time and money and deliver quality results with efficiency to the end-users.

In this article, we would look at five technology companies, their exposure to different technologies and trace their past growth as well as future development plan.

Gentrack Group Limited (ASX: GTK)

Gentrack Group Limited is a developing, profitable, technology company which is listed on ASX as well as NZX and was established 25 years ago at the time of New Zealand’s power market deregulation.

Gentrack is engaged in offering important software for important services. It pairs its strong platform with deep market knowledge to assist the utilities as well as airports lower service costs, promote innovation and confidently endure the market transformation. The company’s cloud provides subscription-based billing, market interaction and customer information solutions.

Gentrack’s FY2019 Results; 7% Growth in Total Revenue

Recently, on 28 November 2019, Gentrack Group released its FY2019 annual results ended 30 September 2019 and a few highlights from the same are as follows:

  • Reported a 7% growth in the total revenue to $111.7 million as compared to the previous corresponding period.
  • Recurring revenue went up by 22% to $78.2 million on FY2018.
  • Adjusted NPAT declined by 31% on pcp to $9.6 million.
  • Incurred a net loss from continuing operation of $3.315 million (123.90%), after $14.6 million impairment.
  • A final dividend of 3 cents per share declared. Thus, the total dividend for FY2019 reached 8 cents per share.

Outlook:

On the outlook front, the company provided the following pointers:

  • Expects results in FY2020 to be broadly flat.
  • Growth in recurring revenue from the installed customer base would be balanced by the reduction in the project revenue.
  • Current Contracts with major UK energy utilities would support GTK in its long-term growth.
  • Continue to invest in its products to meet market needs.
  • Annual performance would depend on the timing of projects and contracts.

Serko Limited (ASX: SKO)

Serko Limited (ASX: SKO) is a market-leading travel as well as expense technology solution in Australasia that is used by 6,000 corporate entities and travel management companies who booked above $6 billion of travel in a year using Serko’s platform.

Serko’s Half Yearly Results (6 months ended 30 September 2019); 29% Growth in Total Income

A few highlights from the half-yearly results are as follows:

  • Total Operating Revenue rose by 29% to $14.7 million.
  • Total recurring revenue increased by 38% to $13.3 million as compared to the previous corresponding period.
  • Total income from all the sources went up by 29% to $15.2 million on pcp.
  • Net profit after tax declined from $0.9 million in 1H FY2018 to a net loss of $0.9 million during the period.
  • EBITDA declined from $1.5 million in 1H FY2018 to $1.4 million in 1H FY2019.
  • Operating expenses went up by 46% to $15.7 million.

Closure of NZ$5 Million Share Purchase Plan:

On 18 November 2019, Serko Limited announced the closure of the NZ$5 million Share Purchase Plan (SPP). The SPP received immense support from the shareholders, with Serko receiving application totalling ~ NZ$18 million.

This SPP was a part of the company’s equity raising initiative announced on 24 October 2019. The funds would be used for the expansion of the marketplace content and also accelerate the global rollout of Zeno.

Catapult Group International Ltd (ASX: CAT)

Catapult Group International Ltd (ASX: CAT) is engaged in building technology that helps athletes as well as teams to perform to their true capacity. Its products include:

  • Wearable technology
  • Athelete Management
  • Video Analysis

Catapult’s FY2019 Results (ended 30 June 2019); Revenue grew by 24%.

Some of the pointers from the results are as mentioned below:

  • Annualised recurring revenue increased by 24% to $66.1 million
  • Revenue went up by 24% to $95.4 million.
  • EBITDA grew by 310%.

Outlook:

  • Board expects strong growth in revenue along with a further reduction in the operating expense growth.
  • The company is dedicated to subscription sales plus ARR growth, with high quality, high margin, revenue.
  • Considers Greenfield sales to new teams, upselling of additional capacity to present customers and to cross-sell additional products to 2,800+ prevailing customers having one product of the company, as the three key drivers to support its future growth.
  • The company restates its dedication to positive free cash flow by FY2021.

Catapult recently announced the renewal of its union-wide performance partnership with Rugby Australia and expanded it to include CAT’s new Vector technology.

rhipe Limited (ASX: RHP)

rhipe Limited (ASX: RHP) is a Cloud 1st, channel 1st company which is recognised as the leading expert in subscription software licensing in the APAC region with a focus on assisting the service provider industry. It distributes and aggregates subscription licensing models for Service Providers from various global leading software vendors like Microsoft, VMware, Red Hat, Citrix, Veeam, Trend Micro, Sinefa and DocuSign.

rhipe’s FY2019 Results (ended 30 June 2019); Net revenue growth of 36%

Below are a few points from the FY2019 results:

  • Gross sales increased by 28% to $252.5 million on pcp.
  • Net revenue went up by 36% to $48.4 million.
  • Operating expense increased by 25% to $33 million.
  • Operating profit rose by 65% to $12.8 million on pcp.
  • Growth of 56% in Reported EBITDA to $10 million
  • PAT increased by 103% to $6.2 million.
  • Declared a dividend of 3 cents per share for FY2019.

In Q1 FY2020 (period ended 30 September 2019)

A snapshot of the Q1 FY2020 period are as follows:

  • Reported 33% growth in sales to $73.1 million on pcp.
  • Group revenue grew by 25% to $12.8 million.
  • OPEX increased by 29% to $9 million.
  • Operating profit rose by 6% to $2.9 million.

FY2020 Outlook:

  • RHP would invest $0.6 million in FY2020 on SmartEncrypt’s development.
  • Expects an operating profit of $16 million (excluding Japan).

Netlinkz Limited (ASX: NET)

Netlinkz (ASX: NET) is the developer of the Virtual Invisible Network which is a globally patented and award-winning network technology that facilitates companies to connect sites, devices as well as staff quickly over the internet via a distinctive network solution that is mostly invisible.

Netlinkz Financial Summary

  • As of 30 September 2019, the cash position of NET stood at $2.05 million.
  • Received $2,715,402 from the exercise of share options.
  • Revenue of $285,000 cash received in August 2019 from VIN Sales in China.
  • VIN developed in the IoT Lab in Beijing, which shall be commercialised via a JV (Beijing iLinkAll Technology Co. Ltd) with iSoftStone (ISS) at an estimated cost of $300,000 per month.
  • IoT lab to be set up in Tokyo to develop source code of Netlinkz for the Japanese market at an estimated cost of $50,000 per month.
  • On 5 December 2019, Netlinkz completed the share placement to sophisticated and professional investors via issue of 25,000,000 new fully paid ordinary shares at $0.13 per share to raise $3.25 million.
  • The fund raised through placement would provide working capital for NET’s JV with iSoftStone in China and in the establishment as well as d funding of the IoT Lab in Tokyo.

Netlinkz Roadmap Summary:

  • In 2020, the company would focus on core product optimisation.
  • In 2021, NET would work on product evolution and growth.
  • In 2022, NET would focus on product maturity and profit.
  • In 2023, the company would look into product iteration and branching.
  • In 2024, the objective would be on product evolution.

Stock performance

The above-discussed stocks closed the day’s trade on 05 December 2019 with the following standings:

Bottomline

In a nutshell, the above discussed stocks have recorded decent performance throughout their respective periods with significant expansion and growth opportunities. The companies seek to further expand and simultaneously look forward to attaining better business benchmarks by capitalising on the prospects.


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