Currency in AUD
Last close As at 02/06/2023
AUD0.04
— 0.00 (−2.56%)
Market capitalisation
AUD43m
Research: TMT
Vection Technologies reported a 60% uplift in its total contract value (TCV) to A$16m from the TCV metric announced at the half year, driven by new contract wins, upsells from existing clients and recognising delayed contracts from Q223. Delivering rapid contract growth in H223 instils further confidence in management’s FY23 revenue guidance of A$24–26m for its IntegratedXR technology stack, reflected in the 9% rise in share price following the announcement. As illustrated by our previous note, promising pilot projects, including a potential A$30m tender in the defence sector, should bolster the company’s growth trajectory. A proven track record of converting c 100% of TCV into revenue by year-end further de-risks the group’s FY23 growth target and our forecasts, which are unchanged.
Vection Technologies |
Rapid H2 growth de-risks ambitious FY23 target |
TCV update |
Software and comp services |
17 April 2023 |
Share price performance Business description
Analysts
Vection Technologies is a research client of Edison Investment Research Limited |
Vection Technologies reported a 60% uplift in its total contract value (TCV) to A$16m from the TCV metric announced at the half year, driven by new contract wins, upsells from existing clients and recognising delayed contracts from Q223. Delivering rapid contract growth in H223 instils further confidence in management’s FY23 revenue guidance of A$24–26m for its IntegratedXR technology stack, reflected in the 9% rise in share price following the announcement. As illustrated by our previous note, promising pilot projects, including a potential A$30m tender in the defence sector, should bolster the company’s growth trajectory. A proven track record of converting c 100% of TCV into revenue by year-end further de-risks the group’s FY23 growth target and our forecasts, which are unchanged.
Year end |
Revenue (A$m) |
Adj EBITDA* (A$m) |
PBT** |
EPS** |
EV/sales |
P/sales |
Net cash*** (A$m) |
06/21 |
3.5 |
(0.4) |
(2.5) |
(0.27) |
13.4 |
15.9 |
2.2 |
06/22e |
18.9 |
0.9 |
(7.0) |
(0.67) |
2.5 |
2.9 |
10.8 |
06/23e |
26.1 |
3.7 |
(6.4) |
(0.59) |
1.8 |
2.1 |
11.5 |
Note: *Adjusted EBITDA is normalised, excluding non-cash payments, exceptional items and interest revenue. **PBT and EPS are normalised, excluding exceptional items and interest revenue. ***Includes debt, financial leases and term deposits.
Vection Technologies delivered a further A$1m increase in TCV to A$16m since our previous update on 27 March, a 60% uplift from the half-year. The increase was driven by contract wins in the public sector and education, as well as from leading service agencies. TCV also benefitted from increased scope from its existing client Trenitalia, a leading European railway operator, and the recognition of delayed contracts from Q223.
The group’s TCV growth trajectory indicates that it could deliver a TCV of over A$22m by year-end, which could increase further if pilot projects evolve into long-term contracts, as management expects. These encouraging lead indicators support our unchanged forecasts and management’s reiterated FY23 revenue guidance of A$24–26m for its IntegratedXR technology stack.
Its recent partnership announcement with expert.AI, a European natural language understanding company, to digitise technical manuals through extended reality and artificial intelligence technologies highlights the potential long-term value of new technology integrations. Further developments to its IntegratedXR technology stack strengthen the group’s position to capitalise on the growing demand for Extended Reality (XR) technology globally, supporting our positive outlook for the company’s long-term prospects.
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Research: Consumer
After the usual slower start to the year, Treatt has had a strong Q2; H123 sales growth was 8.5% at constant currency. Momentum is expected to continue into H2, with current sales growth mainly skewed to price as Treatt continues to recover increased costs, though there was also a small contribution from an improvement in mix. Citrus continued to perform strongly as Treatt pursues its strategy of moving away from the lower-margin products. We raise our FY23 sales forecasts to reflect the strong revenue growth but leave our profit forecasts broadly unchanged at this stage, though we see upside risk to forecasts.
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