Looking for sustained growth – Take note of technology stocks (BVS, NEA, IRI, XF1)

  • Jan 28, 2020 AEDT
  • Team Kalkine
Looking for sustained growth – Take note of technology stocks (BVS, NEA, IRI, XF1)

While investing in the stock market, each investor has a different motive for making investments, where growth of corpus could also be considered as one. Appreciation of capital is the primary focus in growth investing strategy. Growth stocks tends to have high P/E and P/B ratio in terms of valuation metrices. These types of shares can be found in the information technology sector. In the below article, we will be looking at some of the technology companies with their latest updates:

Bravura Solutions Limited

Bravura Solutions Limited (ASX: BVS) is engaged in the development, licensing as well as maintenance of highly specialised administration and management software. During October 2019, the company has acquired an Australian software company FinoComp for the total consideration amounting to A$25 million. FinoComp builds highly flexible software solutions which supports the wealth market of UK.

The software of FinoComp provides additional capability and adds functionality to the company’s solutions. Moreover, this also caters to Wealth Management clients and provides cross-selling opportunities between clients of BVS and FinoComp.

Decent Growth in Financials

  • During FY19, the company delivered revenue amounting to A$257.7 million with a rise of 16% as compared to FY18.
  • The company experienced a growth of 27% in EBITDA and the figure stood at A$49.1 million. NPAT of company stood at A$32.8 million, which increased by 21% from A$27.0 million in the prior corresponding period.
  • During the financial year 2019, the company raised an amount of A$165 million for acquisitions and for organic growth opportunities as well. The company realized success with the placement and strong support was extended by its existing institutional shareholders as well as the broader investment community.
  • As at 30th June 2019, the company was in a strong financial position with net cash amounting to A$194.8 million, which puts the business in an excellent position for taking the benefit of a pipeline of compelling investment opportunities, organic as well as acquisitive.
  • The company also made investment amounting to more than $160 million in its flagship product namely, Sonata. Due to this investment, Sonata has been positioned as a market leader in its key regions and has generated excellent returns for its shareholders. The strong balance sheet as well as experienced and highly skilled management team has placed the company for significant long-term growth.
  • The Board of the company also declared an unfranked final dividend amounting to 4.8 cps. This led the company to deliver a full-year dividend payout ratio of 70% of net profit after tax of financial year 2019.
  • On the outlook front, the company possesses a healthy pipeline of sales opportunities in its current geographies and potential organic as well as inorganic growth opportunities in new and adjacent markets.

At the close of trading day on 28th January 2020, the stock of BVS last traded at A$5.575 per share with a fall of 4.701% The stock delivered returns of 54.76% and 21.88% in the span of three months and six months, respectively.

Nearmap Ltd

Nearmap Ltd (ASX: NEA) is involved in providing technology for geospatial map for enterprise, business as well as government customers. It has recently decreased 9550 restricted stock units on issue, which had been issued to an employee with respect to long term incentive plan of the company and lapsed unvested on cessation of employment. The company would be releasing its financial results for half year ended 31st December 2019 (1H FY20) on 19th February 2020.

ANZ business of the company has continued to report robust growth in FY19. The company’s annualised contact value amounted to more than $9 million in FY19, which led to expansion of portfolio by 19% as compared to previous year.

On the outlook front, the company would be investing in research and development in order to evolve its product offering and to provide expansion to its addressable market. The company will also make investment to maintain competitive advantage to keep company at the forefront of location content and intelligence market.

At the close of trading day on 28th January 2020, the stock of NEA last traded at A$2.440 per share with a decline of 3.557% The stock delivered returns of -10.28% and -22.39% in the span of three months and six months, respectively.

Integrated Research Limited

Integrated Research Limited (ASX: IRI) is involved in the designing, development, implementation as well as sale of solutions. The company is also into the development of applications management software for business-critical computing.

Guidance for 1H FY20

  • The company recently updated the market with guidance for the half year ended 31st December 2019. The company is expecting positive result for the half-year and anticipating profit in the ambit of $11.5 million to $12.0 million against $11.7 million in the prior corresponding period.
  • The company anticipates revenue of between $52.5 million to $53.5 million, reflecting growth in the range of 4% to 6% growth against pcp.
  • Licence sales has been forecasted in the ambit of $32.5 million to $33.5 million, indicating 4% to 7% growth, which was underpinned by strong performance via IRI’s Unified Communications product line as well as the continued growth in the Asia-Pacific operations.

At the close of trading day on 28th January 2020, the stock of IRI last traded at A$2.890 per share with a fall of 1.365% The stock delivered returns of 3.90% and 2.81% in the span of three months and six months, respectively.

Xref Limited

Xref Limited’s (ASX: XF1) business activities revolve around development of technology in the human resources space which automates the candidate referral process for the employer. The company recently announced that FIL Limited and other entities have made a change to their substantial holdings in the company on 20th January 2020 and the current voting power stands at 7.14% as compared to the previous voting power of 8.14%.

In another update, the company announced that it has received commitments from institutional and professional investors to raise an amount of $3,476,000 before costs via a placement of 10,533,333 fully paid ordinary shares.

The company would be utilising the net proceeds from the placement for supporting further growth of the company, which include additional sales and marketing capability, technology development and working capital requirements as well as other general corporate purposes.

The company has achieved record credit usage and cash receipts in Q1 FY20. The company witnessed a rise in credit sales of 23% to $2.46 million, and credit usage surged by 32% to $2.24 million.

The company made an announcement for the acquisition of 103 new clients during Q1 FY19. However, post 12 months, all these clients remain active. These clients also witnessed revenue generation increase 188% collectively from them.

During Q1 FY20, the company has experienced growth trajectory to continue. Though, Q1 has been seasonally the lowest sales period because of fluctuations in the Australian recruitment industry after the end of financial year as well as the summer holiday season in the Northern hemisphere.

At the close of trading day on 28th January 2020, the stock of XF1 last traded at A$0.340 per share with a fall of 1.449% The stock delivered returns of -15.85% and -28.13% in the span of three months and six months, respectively.


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