Section1: Company Overview and Fundamental Insights:

1.1 Company Overview:

Pason Systems Inc (TSX: PSI) is a leading global service provider of specialized data management systems for drilling rigs. Its solutions include data acquisition, wellsite reporting, remote communications, web-based information management, and analytics, enable collaboration between the rig and the office. The company operates in three geographic segments: Canada, the United States, and International (Latin America, Offshore, the Eastern Hemisphere, and the Middle East). 

Kalkine’s Resource Report covers the Investment Highlights, Key Financial Metrics, Risks, Technical Analysis along with the Valuation, Target Price, and Recommendation on the stock.

1.2 The Key Positives, Negatives, Investment Highlights and Risks

1.3 Top 10 Shareholders:

The top 10 shareholders together form ~32.63% of the total shareholding. Fidelity Management & Research Company LLC and Royce Investment Partners hold a maximum stake in the company at ~­­­8.48% and ~7.28%, respectively.

1.4 Key Metrics:

The company's major financials showed good development, with sales increasing by 6.6% in Q1 2024, while EBITDA and net income improved by 77% and 95.2%, respectively, which is a significant positive. In addition, the company's operating margins exceed the industry average. Furthermore, the company reported a reduction in cash cycle days, demonstrating its strength and flexibility.

Section 2: Business Updates and Financial Highlights

2.1 Recent Updates: The below picture gives an overview of its recent activities, such as an announcement regarding decent performance from its international drilling segment and dividend distribution.

2.2 Insights of Q1 FY 2024 Financial Performance:

Section 3: Key Risks and Company Outlook

Section 4: Stock Recommendation Summary:

4.1 Price Performance and Technical Summary:

The stock has witnessed a downside of ~5.32% and an upside of ~8.28% over the last 1 month and 3 months respectively. Moreover, the stock is trading above the average 52-week high price of CAD 17.49 and 52-week low price of CAD 10.75 providing an opportunity to ride the trend.

4.2 Fundamental Valuation

Valuation Methodology: EV to EBITDA Multiple Based Relative Valuation (Illustrative)

Markets are trading in a highly volatile zone currently due to certain macroeconomic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is May 23, 2024. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Dividend Yield may vary as per the stock price movement. 

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock. 

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock. 

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.