With the Mergers and acquisition space heating up at the moment and Trading on a Price to Sales valuation of approx ~3, with $21 million cash in the bank, we take a look at Ansarada Shares to see how this stacks up through our Due Dilligance Filters. This is Should I Buy Ansarada Shares (ASX:AND)
About Ansarada Shares
Ansarada is an Australian company that develops AI-powered virtual data rooms and Material Information Platforms. It is created for business transactions and material events such as mergers and acquisitions, fundraising, tenders and IPOs.
Ansarada’s innovative and purpose-driven virtual data rooms enable the hosting, exchange and management of confidential material information between parties during critical events such as M&A (mergers and acquisitions), fundraising, tenders and IPOs via a business to business (“B2B”) software (“SaaS”) based platform.
Ansarada IPO
Formally thedocyard (TDY), the company acquired Ansarada Shares early this year and recapitalised via the issue of $45 million worth of shares.
The Group recommenced trading on the ASX following the successful merger of thedocyard Ltd with Ansarada Ltd on 9 December 2020. The Group changed its name to Ansarada Group Limited as part of the merger. The transaction also included a related $45 million capital raise from institutional and high net wealth investors.
Ansarada now trade under the ticker code (ASX:AND)with a market capitalisation of $109.2million at $1.36 per share.
The Ansarada Stock (Ansarada ASX) Price is Listed Below:
Ansarada Business Divisions
The Company has business in four main divisions, Deals, Board, Tenders and Compliance.
This is in addition to their virtual data rooms which assist clients in the full lifecycle from raising capital, completing due diligence, Tenders, Selling an Asset, PMI/PAI and audits. The data rooms can be seen as a secure collaboration platform, allowing users to manage critical outcomes end-end.
Customers use Ansarada’s advanced virtual data rooms to connect, share information, collaborate, communicate and facilitate the due diligence process whilst monitoring activity.
- Ansarada Deals – an end-to-end transaction management solution (including project management workflow and virtual data room)
- Ansarada Governance – a governance and compliance platform that assists companies through their lifecycle through a range of events where the accuracy and security of information is critical
- Ansarada Board – a secure SaaS online board management solution which facilitates simple and secure board meeting preparation and execution; and
- Ansarada Tenders – a purpose-built solution to securely run complex, high value tenders.
Quarterly Reports
From the Quarterly Reports, the company has been increasing revenues since the COVID downturn, the company also has been transitioning users from their legacy once-off purchases to a subscription-based model.
Total customers have also been increasing since Q4 2021, this has been growing at between 5 and 8% QoQ since Q1 FY2021.
From Ansarada’s Q4 FY21 Quarterly Update, the CEO updated with “We are positioning Ansarada to benefit from long term structural growth trends and cyclical uplifts in markets. We are maximising the opportunity for our tenders product in Infrastructure with Total Contract Value increasing by 31% in FY21.”
Ansarada Financial History
Gross Profit Margins:
One of the things we like the most about the business is the extremly high gross profit margins, historically this has been maintained above 90%. Gross margin on the comparable half year increased 1% to 91%, this is linked to a decrease in sales commissions as a result of lower revenue. These margins are quite high for a SaaS company.
This company has NearMap like Gross Profit Margin. However, should have a fraction of the costs as Nearmaps. Meaning Net Profit as a percentage should typically be higher.
EBITDA improved by $0.4 million to $0.2 million, up 221% compared to 1H FY20. The improvement in 1H FY21 EBITDA was primarily driven by operational efficiencies delivered across the cost of revenue, product design and development and general and administration functions, as total operating expenses as a proportion of operating revenue decreased to 90.9%, compared to 92.4% in FY20.
However, the company reported adjusted EBITDA significantly higher at $2.22million, equating to a margin of ~14% for the Half year till 31 December 2020
Cash flow for the business has been positive for the previous two quarters has been positive, however it is noted that Q1 FY2021 was cash flow negative, likely in our opinion due to costs associated with the reverse takeover. However we are keen to see what AND Q4 2021 and FY2021 reports will bring.
Ansarada Stock Financials
As of 31 December 2020, the company had $21 million in Cash and Cash Equivalents, with Total assets listed at $83.4million. Total Liabilities were records at (-$25million) leaving a total equity of $57million. With the share price currently at $1.36 and a market cap of $106million this means that the company is backed with over 25c per share in cash. So essentially we think of this as you would be paying circa 80million for a company which we expect may deliver strong earnings of ~$4-6million in EBITDA in FY2021
Insider Ownership And Trading
ANS is largely owned by the General Public with 33% ownership. Institutions own 32%, and individual insiders own 28.5%. It’s great to see a decent segment of ownership in the company is by individual insiders. The CEO Sam Riley owns 5.6% of the company, with other key management people owning significant portions.
There has been some recent insider trading of the stock, with Co-Founder Stuart Clout buying around $50k on market at $1.10 per share. Both David Pullini and Peter James whom are both members on the Board of directors have also purchased significant parcels on market. David P. purchased approx 100k of shares at $1.30 per share. This in our opinion is quite significant.
| Date | Value | Name | Role | Shares | Max Price |
|---|---|---|---|---|---|
| 30 Apr 21 | BuyAU$98,960 | David Pullini | On Board | 76,084 | AU$1.30 |
| 26 Mar 21 | BuyAU$49,995 | Stuart Clout | Co-Founder | 45,450 | AU$1.10 |
| 26 Mar 21 | BuyAU$49,837 | Peter James | On Board | 45,000 | AU$1.11 |
Prophets Take
Ansarada has a massive Gross Profit Margin, historically around ~90%, EBIDTA also seems to be increasing, with revenue also bouncing back from the COVID19 Pandemic and the swtich to subscription revenue models. The company is growing customers at between 5% and 8% and has no Debt on their balance sheet.
In our opinion, the company has NearMaps like gross profit, however off a much lower cost basis. The Management team also mention in presentations that they are looking to grow exponentially through technology rather than putting people in sales positions. We like this approach as it will help to keep staffing costs low.
Recently, key management persons have purchased significant portions of shares at between $1.10 – $1.3 per share.
With the share price currently at $1.36 and a market cap of $106million this means that the company is backed with over 25c per share in cash. So essentially we think of this as you would be paying circa 80million for a company which we expect may deliver strong earnings of ~$4-6million in EBITDA in FY2021. This is only a PE of around 20 based on this years earnings or a Price to Sales multiple of ~4 based on what we think AND will do in FY2021.
Disclosure: Prophet Invest, owns shares in Ansarada.
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