Boku Inc

Boku Inc (LON: BOKU) is a FTSE AIM 100 listed entity that provides mobile payment and identity solutions.

Rationale for Valuation – SPECULATIVE BUY at GBX 170.00

• Market Expansion: Boku extended its reach into Thailand through its Mobile First (M1ST) Payments Network, to reach over 30 million consumer accounts. It has also launched its Verify and Authenticate solutions in Germany.
• Favorable Dynamics: The Covid-19 pandemic has increased demand for digital payments. Moreover, there is a positive momentum in both the Payments and Identity businesses.
• Financial Growth: During H1 FY21, Boku reported a significant top-line and bottom line growth.
• Technical Indicator: From a technical standpoint, BOKU’s stock price is trading around the lower Bollinger band, while 14-day RSI (~38.44) reflecting an oversold scenario.

Key Risks

• UK GDP: The UK economy witnessed a disappointing GDP growth of around 0.1% during October 2021, less than the estimates of 0.4%.
• Economic Challenges: Weak industrial date, global shortage of semiconductors, supply constraints, tightening of monetary policy can hamper the business prospects.

Financial Highlights (for the six months ended 30 June 2021, as on 7 September 2021)

(Source: Company Website)

• Top-line Growth: During H1 FY21, revenue jumped 38% year-on-year to US$34.2 million.
• Bottomline Growth: The net profit before tax increased to US$1.9 million (H1 FY20: US$0.09 million).
• Liquidity: As on 30 June 2021, it reported cash of US$48.6 million (30 June 2020: US$36.2 million).

One Year Share Price Chart

 (Data Source: Refinitiv, Analysis done by Kalkine Group)

Valuation Methodology: Price/Earnings Approach (FY21) (Illustrative) 

Conclusion 

Boku performed well in H1 FY21 and there was a positive momentum across divisions. It expects a strong revenue growth in Identity division to continue in FY22. It is also expanding its addressable market in Payments division. Therefore, the outlook seems positive, and the Company has the potential deliver an incremental value for its shareholders. The stock made a 52-week High and Low of GBX 212.50 and GBX 138.00, respectively.

Based on the geographics expansion, financial growth, industry growth prospects and favourable valuation conducted above, we have given a “SPECULATIVE BUY” stance on Boku Inc at closing market price of GBX 170.00 (as on 23 December 2021), with lower-double digit upside potential based on 49.00x Price/NTM Earnings (approx.) on FY21E earnings per share (approx.).

SkinBioTherapeutics PLC

SkinBioTherapeutics PLC (LON: SBTX) is an AIM All-Share listed life science entity focused on skin health.

Investment Rationale – SPECULATIVE BUY at GBX 41.25

• Growth Drivers: Post FY21, the Group launched the AxisBiotix product on 29 October 2021. Moreover, the Company has better liquidity following the equity placing in November 2021. The key focus for FY22 would be to build market share for AxisBiotix-Ps™, with an initial focus on the UK and US markets. SBTX is also targeting acne as the next AxisBiotix opportunity and plans to initiate a consumer study in 2022.
• Narrowed Losses: SBTX has reduced its losses and holds better liquidity to navigate the Covid-19 related challenges.
• Technical Indicator: From a technical standpoint, 14-day RSI (~40.17) indicates an oversold signal, while the stock price has breached the lower standard deviation of the Bollinger Bands.
• Outperformance Against Index: SBTX’s stock price has yielded over ~166% of return in the past year, showing significant outperformance against the benchmark, FTSE AIM All-Share index.

Key Risks

• Pandemic Induced Disruption: The resurgence in the Omicron variant of coronavirus can limit the Company’s ability to formulate, innovate, launch and commercialize new products.
• Liquidity Risk: The Company has not reported profit yet, and thus, can face liquidity risk. Moreover, macroeconomic instabilities can cause credit risk and delay the launch of new products.

Financial Highlights (for the year to 30 June 2021, as on 30 November 2021)

(Source: Company Website)

• Product Launch: The launch of AxisBiotix-Ps™ was launched 12-month earlier, and thus, early sales were commenced in the UK and US.
• Liquidity: The Group ended the year with a cash balance of £4.6 million (FY20: £2.2 million).
• Operational Achievement: It showed progress in Croda-SkinBiotix® programme and scaled up lysate manufacturing to commercial volumes.

Share Price Chart

 (Data Source: REFINITIV, analysis done by Kalkine Group)

Valuation Methodology: EV/Sales Approach (FY22) (Illustrative)

Conclusion

SBTX has transformed itself as a commercial business from merely a research and product development business in FY21. The launch of AxisBiotix-Ps™ and its first sales to psoriasis sufferers, holds significant growth potential.

SBTX is trading as a penny stock with a history of operating losses. Therefore, investors are recommended to gauge their risk-return profile before punting on this stock. The stock made a 52-week high and low of GBX 88.00 and GBX 14.25, respectively.

Based on the successfully completed AxisBiotix-Ps™ consumer study, narrowed losses, improved cash balance, growth prospects, and favorable valuation conducted above, we have given a “SPECULATIVE BUY” recommendation on SkinBioTherapeutics PLC at the closing market price of GBX 41.25 (as on 23 December 2021), with lower double-digit upside potential based on 1.30x EV/NTM Sales (approx.) on FY22E Sales (approx.).

*All forecasted figures and Peer Information have been taken from REFINITIV.

*The reference data in this report has been partly sourced from REFINITIV.

*Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached.

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