Coffee Microcaps August 2023 Newsletter
Results Special
Hi Everyone
Welcome to this month’s edition of the Coffee Microcaps newsletter. Well, reporting season is out of the way for another 6 months at least. My overall sense from both looking at results and talking to other microcap investors was that things weren’t that bad. Results were certainly mixed, especially in retail consumer-facing stocks. Sentiment also seems to have improved from February when everyone I spoke to seemed very negative in early March. I am reluctant to say we have passed the bottom of the microcap market but my sense we are in a better space than we were 6 months ago.
New Virtual Events Sponsor
I am delighted to announce that Sharesight has been onboarded as the new sponsor for all our virtual events here at Coffee Microcaps. If you are unfamiliar with the Sharesight business, they provide investors with powerful portfolio tracking software that lets you check your investments in one place with award-winning performance, dividend tracking, and tax reporting. As a user of the software myself, I am happy to recommend it and have it aligned with the Coffee Microcaps brand.
Upcoming Coffee Microcaps Zoom Webinar Events
For anyone who doesn’t know, I regularly host presentations from ASX Microcap companies via Zoom Webinars. These events usually happen on Thursday mornings from 9 a.m. - 10 a.m. Sydney time, with two companies presenting.
I want to thank Sharesight for sponsoring all the Coffee Microcaps Virtual events.
The ASX Microcap companies that present generally have the following four criteria.
•Under AUD$300m in market capitalisation
•In revenue and approaching cashflow breakeven or already profitable
•Outside the resources and biotech sectors
•"Industrial Microcaps” In other words, microcap technology, financial services, consumer goods, industrial products or services business, healthcare stocks, etc.
I have created a separate email list for invites to these Zoom events so that I am not spamming all my subscribers. If you want to be added to the events list, please email me at mark@coffeemicrocaps.com, and I will add you. I would love for you to join us for these events. These events are free to attend.
The next events will occur in September. Keep an eye on the Coffee Microcaps social media pages for details of the times, dates, and presenting companies.
Coffee Microcaps YouTube Channel
All the Zoom events get recorded and uploaded to the Coffee Microcaps YouTube Channel. As well as the ASX microcap company presentations, I do interviews with leading ASX Microcap Fund Managers on some of their top picks. Occasionally, we also have presentations or interviews with some international microcap investors.
So if you can’t join the Zoom webinars due to work, kids, life, or whatever, you can subscribe to the Coffee Microcaps YouTube channel and just hit the bell for notifications when new content gets added.
Also, if you look in the description section of each video on YouTube, it has the relevant video chapters, so you can jump to the start of a specific company presentation if that’s what you are after in a particular video.
Coffee Microcaps Results Wrap Wednesday, August 30th
Firstly Nic Pollock, CEO of K2fly (ASX: K2F), returned to update us on how the business is tracking. K2F saw a 28% increase in revenue for FY23 and business is tracking very close to cash breakeven. K2F is looking to further expand its technology product suite with major miners such as BHP, RIO, and Newmont to name a few in FY24 with a solid land and expand strategy that is already proving itself.
Secondly, Scott Greasley, CEO of Anagenics Limited (ASX: AN1). Scott joined the business a little over a year ago and has focused on turning around one of Australia's leading beauty and wellness businesses. A lot of the optimization has been done and a recent acquisition looks to add further scale to the business. Scott noted that further M&A along with organic growth will be the focus for AN1 moving forward through the next 12 - 24 months.
Next up we had Sam Allert, CEO of Reckon (ASX: RKN) Sam was also back to give us an update on how its Reckon One platform for small and micro businesses is tracking and highlighted the expansion of its legal practice management software business in the US with this division seeing a 13% revenue growth in the half year. Reckon is also one of a minority of dividend-paying microcaps on the ASX with the company declaring at 2.5c a fully franked dividend for the half which should be noted.
Finally, we had Nick England, Executive Chairman of Corum Group Australia (ASX: COO). This is another business that has seen significant restructuring over the last 18 months and is now poised for growth through a new marketplace platform for Australian pharmacies which has signed up an impressive 1,800 pharmacies in its first 12 months since launch.
You can watch the recording on the Coffee Microcaps Channel below.
Coffee Microcaps Results Wrap, Thursday, August 31st.
Firstly we welcomed Trent Lund, CEO & Karen Gilmour, CFO of Wrkr (ASX: WRK), who joined us for the first time and gave us a great overview of the business. Wrkr firmly sits at the nexus of employee compliance whether that's super contributions, or regulatory compliance in areas such as healthcare and a myriad of other industries. With a SaaS-style platform and clip-the-ticket revenue model scale benefits are going to start flowing to the bottom line over the coming years driven by regulatory tailwinds, especially in super. If you are interested in #regtech then Wrkr is worth checking out.
Secondly, Sam Budiselik, CEO of Cash Converters Australia (ASX: CCV) joined us from Perth. Sam gave us an update on the changing strategy happening in the business with a growing consumer and vehicle lending book coupled with the buyback of franchise stores in its two main markets ANZ and the UK. The traditional retail business remains in place and is ticking along nicely in the background. A 1c fully franked final dividend was also declared which goes ex on the 14th of September which put this stock on a TTM yield of 8.7% FF.
Next up we had Craig Dower, CEO, and Brenton Lockhart, CFO of QANTM IP (ASX: QIP). Craig and Brenton outlined the investments they have been making in technology and optimisation within the business which has seen a further tick up in margins and they expect further margin improvements as other projects are complete in FY24. Margins are also improving thanks to its IP technology platform business Sortify.tm which is starting to build some nice scale with a large runway ahead of it. QIP also declared a 3.5c FF final dividend.
Finally, we had Dan Madden, CEO of Joyce Corporation (ASX: JYC). Dan highlighted that while the business did see some weakness in consumer spending towards the end of the half they remain in good shape with a rock-solid bank sheet ($46m in net cash) to help them weather macro headwinds that may come in FY24. The market certainly liked the result with stock bouncing 22% for the week. Another microcap dividend-paying stock with a 17.5c FF final dividend going ex on the 13th of September which put this stock on a TTM yield of 7.9% FF.
You can watch the recording on the Coffee Microcaps Channel below.
Coffee Microcaps Results Wrap, Friday, September 1st.
Firstly Tony Abrahams, CEO of AI-Media (ASX: AIM), returned and updated us that the business is tracking nicely on all fronts but the key takeaway for me was the strong performance of the technology division which helped drive a 200% growth in EBITDA. AI advancements are actually enhancing AIM's suite of products rather than competing with them. This has led to the business signing up new customers that previously they could not service such as sports leagues including NCAA and MLS. The business looks well positioned heading in FY24 with $17m net cash on the balance sheet allowing it great flexibility to control its own destiny.
Secondly, Gerard Dyson CEO of Spectur (ASX: SP3). Joined us from out west and really highlighted the fully integrated nature of both their hardware and software which they have built all internally. Spectur responsive smart sensors allow for a wide array of deployments from beaches to mine sites. The business recently has its best June revenue month on record and its third best ever and looks like it is entering FY24 on a strong footing.
Next up we had Tim Kelsey, CEO of Beamtree (ASX: BMT) Tim was joining us for the first time and talked us through what looks to be a very exciting healthcare technology business. BMT provides clinical decision support solutions to hospitals and health departments in both the UK and Australia and is expanding internationally with both its core product and some additional products that it has added to its roster. Tim comes with a strong background in information systems in both the NHS and Australia and certainly knows what the industry and regulators are looking for and what Beamtree can provide to both. The company is guiding to being cashflow breakeven by the end of FY24 which will be a significant milestone for the business.
Finally, we had Christopher Clark, CEO of RocketDNA Ltd (ASX: RKT) talk through the latest regulatory approval it has received from aviation regulators for its drone-in-box solution which really sets the business apart from its competitors and opens up a whole new market for them. The business continues to win more work from large miners such as South32 and Anglo American. The business continues to build momentum and is on the cusp of cashflow breakeven.
You can watch the recording on the Coffee Microcaps Channel below.
Content Recommendation
As part of this newsletter, I also want to highlight some good content worth sharing with my subscribers. Hopefully, the content will be something subscribers will also enjoy and get some value from.
I wanted to share my recent interview with Ben Williamson from InvestorHub where we talked about engaging retail investors as a microcap company. Given the majority of shareholders on the share register of most microcap companies are retail investors it is imperative companies engage with them. As I have said many times before if a microcap stock you are invested in is not doing a good job on the IR front I would be worried about how they are going to get that marginal buyer as I talk about in the article onto its share register. This is something investors can take up with the board as we approach AGM season a November.
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