Originally Posted by
Greekwatchdog
For Bars latest this morning.
OUTPERFORM
Plexure's (PX1) FY21 result provided little new information to the market after pre-announcing revenue but delivered a
slightly larger than expected loss due to increased platform costs. We understand that the company is in the final stages of
an RFP to win a substantial contract with a globally listed, multi-brand food retailer, with management expecting
completion during 1H22. Beyond this potential contract win, management has cited the global recovery profile and
COVID-19 related disruptions as slowing the speed of new customer acquisitions in the short term, but remain sanguine on
achieving its FY25 revenue target of NZ$100m, given the coup of recruiting two high profile international sales executives
from competitors. After success with Indonesian supermarket Super Indo, PX1 also expects to onboard more Ahold
Delhaize (global supermarket group) brands during FY22. With management confident of executing new contract wins,
adding additional McDonald's markets, and growing its international sales presence we retain our OUTPERFORM rating.
What's changed?
FY21 operationally in-line
PX1 delivered FY21 revenue of NZ$29m (+15%) driven by back book growth from existing customers. The -NZ$8m loss was larger
than expected, attributable to higher platform costs and FTE wage inflation. As pre-announced on 9 March, FTE headcount grew to
150, below the company's FY21 target of 190. However, since March 2021, PX1 has acquired 10 new FTEs (taking current headcount
to 160), two of which are senior sales executives, joining from competitors in the US and Asia, each with existing networks and
relationships in respective markets. We view this as a positive endorsement of PX1's proposition and likely driver of future sales.
Update on existing customer base
PX1's presence in McDonald's markets increased from 59 to 64 during the year and the company expects to add Spain, the remainder
of India and three other markets to its platform during FY22. PX1's current contract with McDonald's is driven by store growth, with
an increased user base gross margin erosive. PX1 is confident of changing its contract with McDonald's to align more with user
growth on its platform, with resolution expected by September 2021.
Valuation
With PX1 now trading on an EV/forward sales of 1.9x, our FY23 revenue growth forecast of +17% implies the stock should be trading
nearer 5.7x. We believe recent weakness in the share price presents an attractive buying opportunity for the patient investor.