The Offering

Company Overview

Halo Technologies Holdings Ltd (hereinafter referred to as “Halo” or “The Company”) is a fintech company that offers global equity research and investment technology products. The investment software solution offering of the company can be divided into two integrated elements- HALO Global and HALO Trading. HALO Global provides investors with a multi-functional research and investment software solution for researching global investment ideas and managing portfolios. HALO Trading provides global trade execution for individual companies and exchange-traded fund investment and transaction feeds from non-HALO platforms.

Source: IPO Prospectus 

Key Highlights

• Use of funds:

Source: IPO Prospectus

• Competitive edge over its peers: The company has uniquely positioned itself against its competition in the Australian market. The Halo mobile app provides access to cost-competitive pricing, company analysis, institutional-grade insights and portfolio management tools. This offering represents a much richer feature set than most competitors, who offer only basic company and market statistics along with the trade execution.
  

• Source of revenue: For FY21, the company generated its revenue from three segments: subscription revenue (42.8%), brokerage revenue (55.5%) and Macrovue Vues and other income (1.7%).

• Scalable market: The global wealth management market is valued at USD 1,263 billion in 2021 and is expected to grow with a compound annual growth rate (CAGR) of 9% till 2025 to become USD 1,755 billion in 2025. This provides ample opportunities for the company to capitalize on the industry tailwinds.
  

• Solid topline performance: The company has reported robust topline performance with pro forma revenue jumping from AU$ 1,418,000 in FY19 to AU$ 10,540,000 in FY21, implying a CAGR of 173%.
  

• Dividend Policy: Future dividend payment will depend on the company's operating results and financial condition, availability of distributable earnings, future capital requirements and general business, and other factors considered relevant by the Directors.
  

Financial Highlights

Source: IPO Prospectus

• The company has demonstrated a strong track record in revenue growth, with revenue jumping from AU$ 1,418,000 in FY19 to AU$ 10,540,000 in FY21. Further, the management expects continual growth in its revenue and market share both organically and via acquisitions.
• Reported solid growth in gross profit in absolute terms from FY19 to FY21; however, margin shrank from 49% in FY19 to 39.5% in FY21, led by the increase in the cost of services provided.
• Even though the total overheads have increased in absolute terms from FY 20 to FY21, as of % of sales, it has come down to ~33% in FY21 compared to ~50% in FY20. In FY19, total overheads surpassed the revenue collected from operations. 
• Reported positive EBITDA margin of 18% in FY21 compared to negative margin reported in FY19 and FY20.
• In FY21, the company turned profitable with NPAT of AU$ 1,009,000 compared to losses of
  AU$ 255,000 in FY20 and AU$ 1,241,000 in FY19.

Key Management Highlights

Source: IPO Prospectus

Associated Risk (High)

Investment in the IPO of "HAL" is exposed to a variety of risks such as:

• Intense competition: The global wealth management sector is highly competitive as several options are available to investors and other market participants. Also, fierce competition could lead to an increased price war within the rivals.  
• Regulatory risk: The brokerage and wealth management business is highly regulated, and changes in existing laws and regulations could negatively impact HALO.
• Growth stage company: Given that the company is in the early growth stage, there are significant uncertainties associated with forecasting the future revenues and expenses of the company.

Conclusion

The company has reported significant revenue growth in FY21 and has also uniquely positioned itself against its competitors by providing a feature-rich, global investment software solution by leveraging advanced technology.

However, given that the company is in its early growth stage, there may be uncertainties associated with forecasting the future revenues and expenses of the company. Also, there is intense competition within the sector where the company is operating.

Therefore, based on the above rationales, we have assigned the IPO of Halo Technologies Holdings Ltd with a “Neutral” rating, given the associated risks and the current market scenario, and further evaluation may be required for investors with a high-risk appetite.

*Please note that an IPO can be postponed or put on Hold at the discretion of the company or regulatory authority.

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NOTE - Halo Technologies Holdings Ltd. (Company) is a client of Kalkine Media Pty Ltd (Kalkine Media), an Australian affiliate of Kalkine. However, under no circumstances have Kalkine or its related entities been, directly or indirectly influenced in making any direct or implied rating/recommendation or related insights concerning Company as contained in this report, and no form of compensation is or will be received by Kalkine, Kalkine Media or Kalkine’s other related entities for the publication of this report.