Kinatico Ltd (ASX:KYP) is a ‘Know Your People’ regtech company providing workforce compliance monitoring and management technology and services. KYP has reported a 6% year-on-year increase in Q2 FY24 revenue to $7.1m, and a 145% year-on-year increase in SaaS revenue to $2.4m. SaaS revenue accounted for 33% of total revenue for the quarter, compared to 14% in Q2 FY23. The acceleration in SaaS revenue seen in Q2 reflected the impact of the new contract wins reported at the company AGM in October. On a half-year basis, Kinatico reported H1 FY24 SaaS revenue of $4.4m, up 159% on the previous corresponding period (pcp) and total revenue of $14.3m. The H1 revenue reported compares with our forecast for SaaS revenue of $4.5m and transactional revenue of $10m for the same period. NPAT for the half was $0.4m, compared to a reported net loss of $1.0m in H1 FY23. The half-year result is a significant lift on the $0.2m NPAT reported by the company for FY23. Kinatico ended Q2 with $9.4m cash in hand, including a $0.3m on term deposit to secure a lease. Our DCF valuation remains unchanged at $0.25/share, implying an EV/Revenue multiple of 3.6x FY24f.

Kinatico Limited

• 22 Jan 24
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Amaero International Ltd (ASX:3DA) is a global specialist in advanced materials manufacturing for the defence, aerospace, and other industrial sectors. The company is developing an 800+-tonne a year critical metals alloy powder manufacturing facility in Tennessee, USA, with the initial focus on producing refractory alloy powder, C103, a critical metal powder used in hypersonics weaponry, strategic metals and satellites. The company is moving apace with its planned commercialisation, recently announcing it had secured A$7.5m in corporate financing and that it had executed a binding purchase order for its second gas atomiser, the next generation Electrode Induction Melting Inert Gas Atomiser (or EIGA premium). The two developments move the project closer to commercialisation and are key milestones for the group. The second EIGA atomiser is capable of producing the highest-quality, spherical powder for C-103, refractory alloys and other specialty alloys with high melting points, with an annual capacity of 200+ tonnes of powder. Build time for the second atomiser is expected to be around 14 months with Amaero slating powder production to commence in the December 2025 quarter. This is in line with our forecasts. Amaero will make the initial payment for the second EIGA in the March quarter with subsequent progress payments through final commissioning. Commissioning of the first atomiser is on track to occur before June 30, with C-103 powder production expected in the September 2024 quarter. We anticipate that Amaero will shortly release the executive summary of the review prepared by Boston-based government, defence, aerospace and aviation experts Fairmont Consulting Group. We expect to refine our forecasts from the outcomes released in the review.

Amaero Ltd

• 11 Jan 24
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Human services company Millennium Services Group Ltd (ASX:MIL) has entered a Scheme of Arrangement with an entity associated with Softbank Robotics Singapore for the acquisition of 100% of shares at $1.15/share cash. Shareholders also have the option to accept a mix of cash and scrip in the new unlisted entity, with certain management committing not less than a total of 30% for this option. The bid price represents an 89% premium to the last RaaS update note (October 23) and 360% premium from July 1, 2023. The board unanimously recommends MIL shareholders vote in favour of the Scheme in the absence of a superior offer. Using FY23(a) peer EBITDA multiples and MIL FY24(f) multiples (which broadly assume guidance) the implied bid price is in-line with peers at ~4.5x against a peer average of ~4.3x. Given this low multiple and lack of premium relative to peers, a superior proposal may still emerge although there is a $526k break-fee. The Scheme book is expected to be despatched late February and implementation date assuming shareholders vote in favour mid-April.

Millennium Services Group Ltd.

• 07 Jan 24
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Amaero International Ltd (ASX:3DA) is a global specialist in advanced materials manufacturing for the defence, aerospace, and other industrial sectors. The company is developing a 1,000+-tonne-a-year critical metals alloy powder manufacturing facility in Tennessee, USA with its initial focus on producing refractory alloy powder, C103, a critical metal powder used in hypersonics weaponry. On December 19, the company provided an update to investors on its progress to date this month with several milestones tracking ahead of schedule. These milestones included the completion of the Fairmont Consulting Group Market Study; completion of the final design and engineering for Phase 1 with construction now commenced on the Phase 1 fit-out; advancing contract negotiations for the second atomiser; and an expectation that the first atomiser would now be installed ahead of the prior April guidance. Furthermore, the company is now engaging counterparties and advancing discussions for an offtake agreement and feedstock supply agreement. Executive Chairman Hank Holland told shareholders that there was nothing in the Fairmont Consulting Group’s work which suggested current market analyst expectations needed to be wound back. Amaero anticipates it will provide an executive summary from the study to shareholders in late January, subject to ASX approval.

Amaero Ltd

• 20 Dec 23
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Ricegrowers Limited, trading as SunRice (ASX:SGLLV), has released its H1 FY24 results, delivering RaaS adjusted EBITDA of $69m (+68%) and adjusted NPAT of $33.3m (+107%), both well above RaaS estimates of $57.6m and $25m respectively. Divisionally the key surprise was International, delivering adjusted EBITDA of $33m, 125% above the PCP and 57% above RaaS estimates on the back of increases scale and reach, price increases and lower freight costs. Operating cash flow was the strongest since H2 FY18 despite a high tax payment as working capital improved from lower receivables and inventory reductions. Net debt as a result declined $50m on the April 2023 level to $240m. The company is guiding for ‘continued growth in both revenue and profitability in the second half of the year’ with seasonality ‘proportionally lower’ than that reported in FY23. Importantly, the H1 dividend was raised $0.05/share to $0.15/share and given growth forecasts for H2 we do not see a reduction in the $0.40/share dividend paid in H2 FY23, implying an FY24 yield of at least 8.5% fully franked. Our Sum of The Parts valuation has increased from $8.85/share to $11.45/share on the back of changes in peer multiples and a move to FY24f estimates.

Ricegrowers Ltd. Class B

• 19 Dec 23
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Pioneer Credit Limited (ASX:PNC) is one of the leading acquirers and managers of impaired credit in Australia and has gained its status by maintaining positive customer engagement, an unblemished compliance record with ASIC, and strong relationships with Australia’s largest bank and non-bank lenders. PNC purchases debt from 18 different Australian vendor partners with long-term partnership purchasing arrangements in place with Commonwealth Bank of Australia (ASX:CBA). The company’s AGM updates highlighted the strong position PNC occupies in the marketplace and the expected improvement in NPAT following debt refinancing currently in progress. Reinforcing this strength Pioneer has now announced an additional finance arrangement with Nomura allowing an upgrade to FY24 PDP guidance from $60m to $85m. Additionally, in October proceedings were launched against PWC for negligence, breach of retainer, and misleading or deceptive conduct. PNC believes PWC was responsible for loss and damage to PNC of $27m.

Pioneer Credit Ltd

• 10 Dec 23
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