Supply@Me Capital Plc

Supply@Me Capital Plc (LON: SYME) is a fintech platform provider, offering Inventory Monetisation© service to European Trading and Manufacturing Companies.

Investment Highlights - Avoid at GBX 0.51

• Despite the improved performance, the Company is dependent on external funding to meet working capital requirements and can increase liquidity risk in future.
• SYME requested to the FCA for the resumption of dealings in the Company's Ordinary shares and the lifting of the temporary suspension of its Listing.
• Price/Earnings, EV/EBITDA and Price/Cash Flow metrics are in the negative zone as compared to the Professional & Commercial Services industry multiples.
• From the technical standpoint, the 20-day simple moving average price is currently at GBX 0.561, which is higher than the current price and reflecting a downtrend in the near term.

Key Risks

• The increased usage of remote services has escalated the threat of external fraud and cyber-attack.
• The Covid-19 pandemic presents heightened operational risks for the Company.
• Due to Brexit related uncertainties, consumer confidence is dented while the labour costs can potentially rise.
• There are several strategic, operational and financial risks associated with early-stage companies like seeking to bring new products and services to the market.
• It operates in highly competitive markets and faces intense pricing competition, which can put pressure over margins.

Recent News

On 4 February 2021, the Company stated that it made a formal request to the UK FCA (Financial Conduct Authority) for the lifting of the temporary suspension (which was made on 21 January 2021) of its Listing and the resumption of dealings in the Company's Ordinary shares. The authority required regulatory steps for restoring SYME’s listing and allowing dealing to re-commence. This follows the publication of Interim Results for the six months ended 30 June 2020 and Audited Accounts for the period ended 31 December 2019.

Financial Highlights (for the six months to 30 June 2020 (H1 FY20), as on 29 January 2021)

(Source: Company Website)

• In the six months to 30 June 2020, the turnover increased to £368 thousand as compared with the previous year (H1 FY19: £11 thousand), with a gross profit of £368 thousand and exceptional listing costs of £1.369 thousand (which have been written off).
• It has increased its loss for the year from £113 thousand to £2,142 thousand.
• On 30 June 2020, the cash balance stood at £892 thousand, which was higher than the previous year (30 June 2019: £2 thousand), reflecting sufficient cash to meet short-term obligations.

Share Price Chart (from 20 July 2020 to 20 January 2021)

(Source: Refinitiv, chart created by Kalkine Group)

Conclusion

The Company has shown a decline in financial performance in the first half of the financial year 2020. Despite the higher revenue, the bottom-line performance declined, while profitability remained in the negative zone. The Company has made decent progress in trading performance in the recent period. SYME is working in sync with the global asset management industry, and the Captive Bank project will provide growth opportunities to the business. Despite the progress in trading, the Company cannot provide any meaningful update on inventory funding market due to the impact of the covid-19 pandemic. The investors have a negative sentiment towards the Company's shares based on share suspension (on 21 January 2021). On 4 February 2021, it has taken steps to restore the Company's listing and allow dealings to re-commence. The process of restoring has taken longer and is more complex than normal. Moreover, the Company stated that it has successfully addressed the technical DTR breach regarding financial statements' timing and no FCA investigation is underway. Further announcement regarding the lifting of the temporary suspension and resumption of shares is expected in the near term. The stock made a 52-week low and high of GBX 0.0413 and GBX 1.10, respectively.

Therefore, based on the overstrained prices, restoration of listing pending, and declined financial performance, we have given an “AVOID” recommendation on Supply@Me Capital Plc at the closing price of GBX 0.51 (as on 20 January 2021), while we will watch how strategic initiatives and relisting updates will gain traction in the near term. 

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