mdf commerce inc.

mdf commerce (TSX: MDF) enables the flow of commerce by providing a broad set of SaaS solutions that optimize and accelerate commercial interactions between buyers and sellers. The company’s platforms and services empower businesses around the world.

Key Highlights:

• The company has a higher average receivables day of 93.4 than the industry median of 42.5, indicating that it is under strain with its working capital and is unable to adequately churn its cash.
• In Q4 2021, the Company witnessed lower performance across its margin matrix against the industry, which exhibits the pressure on company.
• From EV to EBITDA multiple standpoints, MDF shares are available at an NTM EV/EBITDA multiple of 24.4x compared to the industry (Technology) median of 13.5x.
• The stock is trading well below the crucial support levels of 50-day and 100-day SMAs, which suggests weakness in the prices.

Source: REFINITIV, Analysis by Kalkine Group

Conclusion: For fiscal 2021, the company reported lower Adjusted EBITDA of CAD 5.7 million, representing a margin of 6.8%, compared to CAD 10.3 million and 13.7% margin, respectively for fiscal 2020. Moreover, the company is trading at the stretched valuation against an industry along with weak technical perimeter. Hence, based on the above facts, we recommend an “Avoid” rating on the stock at the closing price of CAD 8.95 on August 04, 2021.

Itafos Inc.

Itafos Inc. (TSXV: IFOS) is a pure-play phosphate and specialty fertilizer platform with an attractive portfolio of strategic businesses and projects located in crucial fertilizer markets, including North America, South America, and Africa.

Key highlights

• In Q1 2021, the Company witnessed lower performance across its margin matrix and ROE against the industry, which exhibits the pressure on company.
• From Price to Earnings multiple standpoints, IFOS shares are available at an NTM PE multiple of 15.2x compared to the industry (Basic Materials) median of 7.7x.
• The company is highly leveraged with total debt/equity ratio at the end of March 2021 stood at 3.11x against the industry median of 0.85x.
• The stock is trading well below the crucial support levels of 50-day SMAs, which suggests weakness in the prices.

     Source: REFINITIV, Analysis by Kalkine Group

Conclusion: Recently, the company posted an excellent set of numbers reflecting operational and financial resilience. However, despite displaying resistance in Q1 2021, the firm had a weak gross margin and net margin profile compared to the industry. In comparison to the industry median of 0.87, the debt-to-equity ratio is high at 3.11. Moreover, it has increased its long-term debts to USD 240.6 million as of March 31, 2021. Additionally, the stock is trading on the stretched valuation against an industry. Hence, based on the aforementioned facts, we prefer to remain on the sidelines and recommend a ‘Watch’ rating on the stock at the closing price of CAD 1.32 on August 04, 2021. 

Extreme Vehicle Battery Technologies Corp

Extreme Vehicle Battery Technologies Corp (CSE: ACDC) is a Blockchain and Battery technology company with revolutionary, patented Battery Management Systems (BMS) designed to meet the exponentially growing demand for scalable, smart solutions for the rapidly growing Electric Vehicle (EV) and Energy Storage Solution (ESS) markets.

Key Highlights 

• Expected new products launch: Recently, the Company announced that its IoniX Pro RV Freedom battery, and IoniX Pro SmartWall have begun the manufacturing stage, and both products are expected to have the first versions landed in the market in 2021.
  

• Partnership with Daymak Inc.: The Company consented to an association arrangement with Daymak Inc., Canada's biggest wholesaler of Light Electric Vehicles (LEVs). The gathering has effectively started the way toward getting its items into the Daymak appropriation organization, including the absolute most noticeable North America names, like Costco, Walmart and Best Buy. The Company is additionally working with Daymak to bring new items into the LEV market together.

• Revenue guidance for the next 24 months: The Daymak collaboration is expected to produce sales of up to CAD 300 million in the next 24 months, according to the company. It further projects that the costs of raising this income would be CAD 225 million, resulting in profits of up to CAD 75 million.
  

Financial overview of three months ended April 30, 2021 (Expressed in Canadian dollars)

Source: Company

• During the three months ended April 30, 2021, the Company earned zero revenue, same was the result in the previous corresponding period.
• On the back of higher advertising cost at CAD 2.83 million V/s CAD 22,500 and higher consulting fees of CAD 518,500 V/s CAD 9,000 along some other operating expenses, the company posted Net loss of CAD 3.62 million against CAD 192,247 in pcp.
• As of April 30, 2020, the Company increased its cumulative assets at CAD 3.5 million, consisting of total current assets of CAD 2.56 million compared to cumulative assets of CAD 1.5 million in pcp.
  

Risks associated with investment

There are many factors which could impact the operations and financials of the company such as customers’ ability to pay for the company’s EV charging equipment and related service, high completion, the impact of business disruption would lead to negative impact on demand for the company’s EV charging equipment and related services, etc.

Stock recommendation

The accelerating adoption of electric vehicles represents an enormous opportunity for the Company. The Electric Vehicle (EV) market is one of the fastest-growing markets globally. It is projected to grow almost 5x over the next six years, which would generate plenty of opportunity for the Company. Moreover, the group is working with Daymak to introduce new products into the LEV market and expects to produce sales of up to CAD 300 million in the next 24 months, drawing a profit of up to CAD 75 million. Additionally, the group is expecting to launch its new products in Canada during 2021, which is a key positive. Therefore, based on the bright prospects of the company, we recommend a “Hold” rating to the stock at the closing price of CAD 0.27 on August 04, 2021.

One-Year Technical Price Chart (as on August 04, 2021). Source: Kalkine, Analysis by Kalkine Group 

Pacific Silk Road Resources Group Inc.

Pacific Silk Road Resources Group Inc. (TSXV: PP) is a Canada-based company engaged in the acquisition, exploration, and development of mineral properties, mainly potash.

Key Highlights:

• The company is yet to report any revenue from its operation, while constant net losses are impacting the company’s overall health.
• The company has witnessed increase in the total debt wherein Q1 FY21 total debt stood at CAD 0.26 million increased from CAD 0.14 million in Q1 FY20.
• The stock of PP closed below the 20-days, 50-days and 100-days SMA, indicating a bearish price trend.

Source: REFINITIV, Analysis by Kalkine Group

Conclusion: The Company is an exploration stage mining company and is yet to report revenue from its operations. Moreover, debt burden is increasing, and stock is moving in the bearish trend. Hence due to the uncertainty in the company’s performance, we prefer to remain on the sidelines. Considering the above facts, we recommend an ‘Avoid’ rating on the stock at the last closing price of CAD 0.025 on August 04, 2021.

*The reference data in this report has been partly sourced from REFINITIV.

Disclaimer

The advice given by Kalkine Canada Advisory Services Inc. and provided on this website is general information only and it does not take into account your investment objectives, financial situation and the particular needs of any particular person. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. The website www.kalkine.ca is published by Kalkine Canada Advisory Services Inc. The link to our Terms & Conditions has been provided please go through them. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations later.