Microcap Watch: Skyfii, Laserbond

By Mark Tobin | More Articles by Mark Tobin

Well, one of the roughest month in a long time is behind us and November has seen a bit of rebound in share markets. Microcap’s were one of the worst hit in the last month, with the S&P/ASX Emerging Companies Index returning -10.91% for the month!

Other indexes faired somewhat better, in relative terms at least with the S&P/ASX All Ordinaries and S&P/ASX Small Ordinaries indexes down -6.47% and -9.60% respectively. So there wasn’t really any part of the market spared the pain.

Skyfii Limited (SKF: ASX) announced their 4c and provided a great presentation on the business during October.

Skyfii provides business intelligence software and platforms to venues. Places like hotels, casinos, shopping malls, etc use Skyfii’s products in order to get a better understanding of their customers usually through the aggregating data from the guest wifi but it also neatly pulls information from social media, foot counters, CCTV, POS systems all into one system. All of this big data is then refined into analytics that can help venues optimise the experience for their patrons while at the same time helping to drive revenue for the venue.

The business is still cashflow negative, however, management note in their latest 4C that they do not need to raise any further capital to maintain operations. The company has cash at bank at the end of the quarter of $1.1m and had a cash burn of just under $400k for the quarter. The cash burn dropped just over $200k from the last quarter of FY18. The also recapped a slew of new contracts signed in the first quarter of FY19 and guided to 1HFY19 revenue to be up 68% on the PCP. At this sort of run rate profitability and cash flow positive operations are not far away. Getting to that point could be an interesting turning point for the company.

Laserbond Limited (LBL: ASX) also had their AGM in the month. They are one of the first company’s to do so as AGM season only really ramps up now in November.

The share price has been on a big run over the last year as the business has started to kick some goals with new markets and products coming online. They are forecasting 1HFY19 revenue growth to be up 36% – 45% on the PCP and EBITDA to come in around circa $1.8 – $1.9m vs the PCP of $0.6.

The company also pays a small fully franked dividend which is always nice. As I have said in the past in the microcap end of the market where dividend income can be scarce any dividend is great and certainly marks a company out from the crowd in a positive sense. The share price has had a good run over the last 12 months as I said and thus the stock is not super cheap by any means. However, these new growth drivers are making it looking interesting on a longer-term view.

Mark Tobin

About Mark Tobin

Mark Tobin is a Senior Analyst at Independent Investment Research. Mark's focus is on ASX listed microcap and nanocap​ stocks which is​ anything from $10mil to $300mil market cap and everything​ in between. This truly​ is the under-researched​ part of the ASX.

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