Penny Stock Inventis Share Price Zooms Post FY2020 Numbers

Summary

• With COVID-19 induced lockdowns and restrictions, businesses witnessed several risks; however, strong management, need-of-the-hour products, and quickly adapting to the new normal helped several businesses to emerge as winners.
• Amid the challenging business environment, Inventis, a diversified industrial company, registered a 330.7 per cent turnaround in EBIDTA and secured three new patents during FY20.
• The company appointed new management team and acquired interest in four different Australian brands during the year, with the strategy changing business model dynamics and performances improving notably.
• Inventis has strong pipelines and a robust R&D program.

Amid the pandemic stricken market, when a company reports some substantial growth in its performance, it always attracts investors’ attention. Also, ever since the pandemic began, the market has been highly volatile, reacting to every piece of news.

In this backdrop, let's discuss diversified Australian industrial company Inventis Limited (ASX:IVT), whose stock experienced a surge of 33.33 per cent on ASX on 8 September 2020 to AUD 0.008, post the release of its investor presentation for FY2020 on the previous day, 7 September. Inventis released its full-year results on 31 August 2020 and in the last five days, its share price has appreciated by 50 per cent.

Let us cast an eye over the company’s performance for the 12-month period ended 30 June 2020.

In an extremely challenging business environment, Inventis turned the corner with a significantly improved EBITDA and earnings result compared to FY19. The company witnessed a massive 330.7 per cent turn­around in EBITDA to AUD 822.76K for FY20. However, consolidated revenue dropped by 32.1 per cent.

With its new trusted management expertise, the company managed to gain momentum despite COVID­19 restrictions and declined consolidated revenue after a torrid last two years. IVT reported annualised total network sales of AUD 14.5 million per annum, and in FY21, total network sales are expected to exceed AUD 20 million.

The company maintained that since the appointment of new management team in October 2019, headed by Managing Director Anthony Mankarios, the business model dynamics have changed, and performances have improved notably.

The new team delivered on four recent takeovers, changing the dynamics of the previous business model, creating a much better shareholder long term return expectation.

• Investment and supply deal in 49 per cent of Winya Indigenous Office Furniture Pty Ltd
• 100 per cent acquisition of Workstations Pty Ltd
• 100 per cent acquisition Bassett Furniture Pty Ltd (AUS)
• Brand acquisition Bevisco Commercial Interiors­ Bevisco ™

The full annualised benefits of the acquisition revenue are expected in FY21.

Furniture Products Much in Demand

Inventis' commercial office furniture products' market got momentum; hence the division was expanded to meet the growing needs. In FY20, furniture division grew network sales by 37 per cent. This covered an investment of 49 per cent in Winya Indigenous Furniture and then the opening of new showrooms across Australia, displaying innovation at its best in IVT's products.

In November 2019, IVT acquired 100 per cent of Workstations and built a successful online SEO plan for mid-­tier commercial office work­ space.

In April­ 2020, the company acquired Bassett Furniture, which specialises in commercial lounges and soft­ seating as well as offers customised re­upholstery work. Bassett is a preferred supplier to state public transport and rail authorities. It is a leader in the age care soft­ seating.

IVT's most recent acquisition was the prominent brand Bevisco Commercial Interiors. Bevisco's annual revenue was in the order of AUD 4 million to AUD 7 million.

Inventis' furniture division is on track for its FY21 target of achieving total group network sales of more than AUD 15 million. The company has also included an international brand for seeking new multimillion-dollar deals with overseas clients, currently being negotiated by the management team.

R&D Developments – 3 New Patents

FY20 saw significant developments in R&D with three new patents secured that are likely modify the everyday practices by many corporates and government departments, particularly in the work from home environment.

Three patents are:

• Australian Provisional Patent Application No. 2019904844­ WiLAS emergency alert systems
• Australian Provisional Patent #2020901303 lodged­ Smart Chair ™
• Patent Seating­ #2019202821 Dual Density Mk11

Progress Towards FY21

Inventis is benefitting from the government's JobKeeper program. The company has strong pipelines and a robust R&D program that has delivered excellent products like G¬ Smart ¬ Smart Chair ™, for which a provisional patent was submitted in February 2020.

Moreover, Inventis technology has developed a strong pipeline with numerous Heads of Agreements inked during this period, with cutting edge technology and favoured supply terms. The technology division expanded pipeline from AUD 4.8 million to AUD 68 million in just over 12 months, as well as developed new international sales and distribution opportunities in New Zealand, Philippines, United States and the European Union.

During FY21, IVT would consider issuing convertible notes to lower its current debt level by AUD 5.6 million and provide better outcomes for its shareholders via a fully franked dividend. Moreover, the company plans to continue its organic growth efforts and seek targeted opportunities for mergers & acquisitions.

The group remains committed towards being an Australian manufacturer, delivering quality products that address safety and health concerns of the users.