The Australian Stock Exchange hosts International Investment Conferences bringing together institutional investors and key management of selected companies several times a year. These conferences are known as the ASX Spotlight Series and are held in major financial centres such as Singapore and Hong Kong in the Asia Pacific region and London and New York in the west. The ASX also hosts CEO Sessions held in Sydney.
Of the thirteen total companies presenting at the most recent Spotlight Conference in Hong Kong and then Singapore, there were several start-up stocks with seemingly solid potential making presentations. Two reported revenue in FY 2016 while investors in the remaining three are still waiting. All of them are relative newcomers, listing on the ASX via reverse mergers. The following table lists the companies in alphabetical order.
US investor Benjamin Graham is recognised as the father of value investing. He claimed in the short term the stock market is a voting machine. That characterization applies to all stocks, as price movement reflects the belief of the investing community that existing companies will continue to perform and start-ups have the potential to perform well in the future.
The share price performances listed in our table reflect the view of market participants in the future value of these companies. The first, healthcare informatics provider Alcidion Group Ltd (ALC) used a backdoor listing (reverse merger) with an inactive mining company, Naracoota Resources, to raise capital for Alcidion’s plans to enter the US market. The company began trading on 28 February of 2016 with a closing price of $0.05. Within six months the stock price began a dramatic rise reaching a high of $0.12 only to gradually decline to the current $0.07. Here is a price movement chart.
Alcidion may be new to the ASX but the company has been working on information technology advancements in healthcare since its founding in 2000, co-founded by a medical doctor with a PHD in medical informatics from prestigious US based Stanford University; and a business executive with extensive experience in public and private healthcare systems.
The company’s “informatics” system known as “MIYA, takes a quantum leap from standard Electronic Medical Records (EMR) systems, which do little more than transfer paper files to digital formats, to include diagnostic tools for clinical use.
Alcidion’s multi-level Miya software platform incorporates patient information from multiple sources to allow physicians in a variety of clinical settings to make patient care decisions. The system is in use in Australia and the company is casting a covetous eye on the US market in anticipation of the US leading the way towards a $USD4.65 billion global market for Clinical Decision Support Systems (CDSS) like MIYA by 2018.
In its first Financial Reporting for FY 2016 the company reported revenues of $2.8 million and a loss of $2.5 million, prior to extending its reach through new contractual arrangements with medical centres in Australia.
Kitchen appliance and consumer product marketer and distributor Shriro Holdings Ltd (SHM) is the second company in our table already generating revenue. Shriro has been distributing Casio Electronics products in Australia since 1982 but adopted an aggressive growth through acquisition strategy in 2001, culminating in its current array of four company owned brands with a product array of “must-have” kitchen appliances from ovens to cooktops. Shriro has strong tailwinds at its back from the home-renovation and new housing boom here in Australia. The company maintains kitchen appliance displays in more than 1,000 retailers with four dedicated company showrooms used for cooking demonstrations.
The company went public on 23 June of 2015, with an issue price of $1.00 per share, rising and falling along the way and essentially ending in the same place today, badly underperforming its larger appliance rival Breville Group Limited (BRG). Here is a price movement chart.
With a market cap approaching $1.4 billion dollars Breville dwarfs Shriro’s market cap of $104 million. Investors casting their votes for Breville may be overlooking other comparisons. Shriro has a current dividend yield of 9.2%, fully franked, compared to Breville’s 2.8%, 70% franked. Breville’s trailing twelve-month P/E ratio is 25.93, compared to Shriro’s 7.96. Between FY 2015 and FY 2016 Breville’s net profit rose 7.5% while Shriro’s shot up 86%.
Aussie investors appear convinced marijuana stocks are the “next big thing” on the ASX, despite cautionary remarks from market commentators regarding high valuations awaiting future revenue generation. In the eyes of many, Auscann Holdings Group Ltd (AC8) may be the best of breed in this high-risk sector. While the medical use of marijuana for pain relief represents a viable market, at present there are a host of unproven players on the ASX chasing that market. The rewards for the winners may be substantial as forecasters claim the market for medical marijuana in Australia alone approaches $9 billion dollars.
Auscann may have an edge due to its joint venture relationships with established players in Chile and Canada. Canopy Growth in Canada is a global leader in the development of medical marijuana and Fundacion Daya is the only grower in Chile and is actively pursuing research in the uses of medical marijuana as well.
The company has been trading less than six months, coming onto the ASX in February of this year with an explosive rise in the stock price. As is often the case with start-ups Auscann is burning cash and recently announced a capital raise to fund operations. Investors were disappointed and AC8 joined other stocks in a sector wide decline over the last three months. Here is a price movement chart for Auscann.
In April, the company harvested its first crop in Chile and in May secured a licence to begin cultivating medical marijuana here in Australia. Auscann is already importing medical marijuana compounds from Canopy Growth.
Telehealth is an emerging field in healthcare using telecommunication technologies to deliver medical services and education. Given the number of smartphones around the world this is potentially a mega-trend in the making. Australia’s medical device company, ResApp Health Ltd (RAP) is developing technology allowing physicians to make remote diagnoses of respiratory ailments using a smartphone. Simply put, patients couch into their smartphones and the app algorithm takes it from there, diagnosing and measuring the severity of a respiratory condition.
The company began in 2009, looking for commercial applications of a technology developed by a University of Queensland scholar; going public in July of 2015. The stock price has not been without volatility, perhaps due to an April of 2016 capital raise and concerns over physician willingness to accept a phone diagnosis over a personal examination. However, the stock price is still up over 1,000% since listing. Here is a price movement chart for RAP since it began trading on the ASX.
The company states it has more than 2,600 patients enrolled in pediatric and adult studies, with a US FDA (Food and Drug Administration) pediatric study expected to announce top-line results sometime in July of this year. ResApp management’s estimation of the size of the market claims more than 700 million patients per year visit physicians for respiratory disease.
It may come as a surprise to consumers in developed countries to learn more than four billion people around the world have no access to mobile communication. With a catchy vison statement – Anyone, Anytime, Anywhere – Sky and Space Global Ltd (SAS) plans to launch an extensive network of nanosatellites (small satellites) to tap into what company management projects could be a market generating US$1 billion dollars in annual revenue for SAS.
Not surprisingly, investors have been climbing aboard with gusto. Here is a price movement chart for SAS since it began trading on the ASX last May via a backdoor listing.
Initial plans called for the launch of 3 Diamond Satellites, which was successfully accomplished on 23 June. Management estimates eight weeks of trials, with initial revenue generation anticipated following successful completion.
By 2020 SAS expects to have 200 operational satellites capable of providing service along the equatorial belt. Impressively, once its full Equatorial constellation of 200 nanosatellites is in operation, management believes it has the potential to generate US$600 million to US$1 billion in annual revenues.
The company has a partnership arrangement to include an SAS app in SocialEco Ltd.’s $1 smartphone, with longer term plans to develop a $20 Android phone with an installed SAS App. The master plan calls for full global coverage with an additional 1,000 satellites, with an as yet undisclosed time frame.
Sky and Space Global is led by experienced team of Israeli aerospace and satellite industry experts. This UK incorporated company chose to list on the ASX over seeking institutional funding from sources in Israel, the UK, and the US.