On Track to Achieve Prospectus Targets
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Overview: Cape Range Limited ("Cape Range", "the Company") is an Australian software company focused on accounting and business intelligence services. The Company owns Biztrak Business Solutions ("Biztrak"), an Asia-focused company offering software solutions to 18,000 companies with over 37,000 users. Cape Range acquired Biztrak in June 2017 and listed on the ASX in November 2017 after raising $5.6 million. During FY2017 the Company reported a loss of $4.1 million which includes a one-off reverse acquisition cost and share-based payment expenses totalling $3.8 million.
Catalysts : Biztrak is on track to shortly provide an update on Phase 1 of its new cloud-based SaaS product Biztrack Online as per its prospectus guidance. Completion of this R&D milestone is a catalyst and puts the company in a strong position to launch the product in H2 CY18. As the Company prepares for the commercial rollout, strong uptake of the platform could deliver higher earnings margins and significantly strengthen Biztrack’s recurring revenue base. A tight capital structure and low overheads provide a favourable foundation for growth, while a strong funding position and strategic relationship with major shareholder iFREE allows the company to assess strategic opportunities.
Hurdles : The commercial success of Biztrack Online remains to be validated and there is no guarantee that forecasted synergies can be realised. Despite Biztrack’s low cash burn rate, the Company’s reliance on external capital may not entirely be eliminated as historic results were somewhat volatile. Entry barriers to the industry are limited to IP and know-how and the Company may be subject to increasing competition in an already competitive sector.
Investment View: Cape Range offers speculative exposure to demand accounting software services in Asia. The upcoming launch of Biztrack Online is a catalyst and could significantly improve the Company’s recurring revenue base and facilitate international expansion. Operational risks and competition are the primary hurdles. Cape Range is on track shortly provide an update on key prospectus targets and successful completion will allow the Company to rapidly transition towards a SaaS revenue model. Biztrack’s revenues have historically been lumpy and somewhat limited in size and scope, which the Company plans to address with Biztrack Online. Cape Range has a low cash burn rate and remains well funded to pursue strategic growth initiatives if they arise. As Cape Range achieves major milestones we initiate coverage to monitor its growth potential.
THE BULLS AND THE BEARS
THE BULLS SAY
- Biztrak is on track to launch its cloud-based SaaS product in H2 CY18 - Biztrack Online – and will shortly provide an update on Phase 1 of its new cloud-based SaaS
- As the Company prepares for the commercial rollout of its cloud-based platform, strong uptake of the platform could deliver higher earnings margins and significantly strengthen Biztrack’s recurring revenue
- A tight capital structure and low overheads provide a favourable foundation for growth
- The Company has a strong funding position and a favourable strategic relationship with major shareholder iFREE allows the company to assess strategic
- Cape Range offers speculative exposure to demand accounting software services in
THE BEARS SAY
- The commercial success of Biztrack Online remains to be validated and there is no guarantee that forecasted synergies can be
- Despite Biztrack’s low cash burn rate, the Company’s reliance on external capital may not be entirely eliminated
- Historic financial results were somewhat limited in scope and size
- Entry barriers to the industry are limited to IP and know-how and the Company may be subject to increasing competition in an already highly competitive
- An investment in Cape Range should be considered speculative in nature
General Information Only
S3 Consortium Pty Ltd (S3, ‘we’, ‘us’, ‘our’) (CAR No. 433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information and is for informational purposes only. Any advice is general advice only. Any advice contained in this article does not constitute personal advice and S3 has not taken into consideration your personal objectives, financial situation or needs. Please seek your own independent professional advice before making any financial investment decision. Those persons acting upon information contained in this article do so entirely at their own risk.
Conflicts of Interest Notice
S3 and its associated entities may hold investments in companies featured in its articles, including through being paid in the securities of the companies we provide commentary on. We disclose the securities held in relation to a particular company that we provide commentary on. Refer to our Disclosure Policy for information on our self-imposed trading blackouts, hold conditions and de-risking (sell conditions) which seek to mitigate against any potential conflicts of interest.
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The information contained in this article is current as at the publication date. At the time of publishing, the information contained in this article is based on sources which are available in the public domain that we consider to be reliable, and our own analysis of those sources. The views of the author may not reflect the views of the AFSL holder. Any decision by you to purchase securities in the companies featured in this article should be done so after you have sought your own independent professional advice regarding this information and made your own inquiries as to the validity of any information in this article.
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