Farmers Edge Inc

Farmers Edge Inc (TSX: FDGE) is a Canadian company, which provides services into digital farming solutions mainly into field-centric data, artificial intelligence and integration via covering the entire agricultural ecosystem. The Company also caters the data management platform named FarmCommand which allows farmers, agricultural professionals, and agriculture-businesses in the data interaction.

Key highlights: 

• Completes initial public offering: Recently, the company completed its initial public of 7.35 million common shares at a price of CAD 17.00 per share for total gross proceeds of CAD 125 million. The Common Shares commenced trading on the Toronto Stock Exchange under the symbol "FDGE".

• Improving operating matrix: The company’s business has evolved over many years of rapid growth. It has consistently observed an increase in subscribed acres resulting in growth from roughly 2 million Subscribed Acres in 2015 to over 23 million Subscribed Acres as of December 31, 2020. Its total revenue increased from CAD 18.1 million in 2018, to CAD 23.8 million in 2019 and CAD 45 — 47 million in 2020, representing year-over-year increases of 31% and 93%, respectively. For the 12-month period ended December 31, 2020, approximately 80% of its revenue was generated from recurring, subscription-based software solutions. Furthermore, recently Farmers Edge Inc.  collaborated with Munich Re, one of the leading reinsurance companies which assists company into selling and improvement of its products into various verticals.

Source: Company 

• Reducing data and technology expense: During Q4 2020, Farm Edge Inc. entered into a new multi-year satellite imagery agreement with Airbus which is at a remarkably lower cost than other suppliers. Additionally, the new agreement anticipated to reduce the annual satellite imagery costs by approximately USD 9 million or 60% for FY 2021 as compared to FY 2020. 

Financial overview

Source: Company 

• For nine months ended September 30,2020, the company posted revenue of CAD 26.76 million, against CAD 17.10 million in the previous corresponding period. The revenue increased primarily due to higher subscribed acres.
• The company reported lower operating loss of CAD 55.65 million, against CAD 66.18 million in the previous period on account of reduced data & technology infrastructure expenses partly offset by higher G&A and depreciation expenses.
• Net loss stood at CAD 67.55 million, against CAD 83.85 million in pcp. 

Risks associated with investment

Numerous risk factors are associated with the company, which could drag its financials. The company’s success depends on its ability to continue to enhance products and develop new products and services, reduced demand for agricultural products and services could reduce its sales and profitability. 

Stock recommendation

The agriculture market is global, in both footprint and new digital agronomy opportunities. Agriculture is one of the industries witnessing disruption, as digital tools are drastically impacting the industry to increase efficiency and ensure sustainability of production. We believe, like other industries, the COVID-19 pandemic may act as a catalyst for greater adoption of technology and accelerate the revolution of the agriculture industry. Furthermore, the company is continuously observing an increase in subscribed acres and in its revenue. Also, company has taken several initiatives for reducing its operating cost. Also, we are less descriptive for this stock as company recently listed on March 3, 2021 hence, we have miniscule information. We are awaiting its 2020 full year numbers, which would throw proper light on its financials. Therefore, based on this we recommend a “Watch” rating on the stock at the closing price of CAD 17.90 on March 12, 2021.

Price Chart, Source: Refinitiv

Compel Capital Inc.

Compel Capital Inc. (CSE: SCRN) provides turnkey coronavirus screening solutions to the private sector. The company has unique access to multiple manufacturers of high quality South Korean test kits and its strategic partnership with Canvas Labs in Vancouver and Integrated Explorations in Ontario.

Key Updates:

• On March 11, 2021, the group announced a 100% acquisition of GoStop Inc., an arm's length private COVID-19 digital passport medical services company incorporated under the laws of British Columbia. The company would enable the medical professionals to access key information on the patient to diagnose and treat with the proper medical solutions.
• On March 10, 2021, the group announced its partnership with Enoura Medical in United Kingdom and has been approved by the National Health Service (NHS) in London UK, and subsequent to this, the group is eligible to bid on NHS contracts by offering its suite of services and products. Enoura Medical provides high-quality PPE & medical supplies for wholesalers, industries, pharmacies, hospitals, clinics, nursing/care homes and the average consumers.

Financial Highlights for the period ended September 20, 2020:

• SCRN announced its quarterly result, wherein the company posted a net loss and comprehensive loss of CAD 0.011 million, as compared to CAD 0.013 million in the previous corresponding period (pcp).
• The group reported an accumulated deficit of CAD 0.683 million, while shareholder’s deficiency stood at CAD 0.140 million.              

Q3FY20 Income Statement Highlights (Source: Company Report)

Risks:  The group has acquired GoStop and would commence its operations gradually in the coming quarters. Hence, due to the absence of a stable revenue base coupled with constant quarterly losses, the group might witness a liquidity crunch in the future.

 Stock Recommendation:

The recent collaboration with Enoura Medical would provide an international exposure. ScreenPro's unique access to multiple manufacturers of high quality South Korean test kits and its strategic partnership with Canvas Labs in Vancouver and Integrated Explorations in Ontario. This platform allows ScreenPro to be a nationwide provider of a full-service testing solutions across Canada. Moreover, the acquisition of GoStop would enhance its mark across a new digital platform, particularly for the COVID-19 passport developed using a privacy preserving approach using decentralized proximity tracing through the patient device authentications certificates. Apart from the screening purpose, this platform can be used for ScreenPro's current COVID testing but also be used for vaccine schedules. However, the company is yet to start its operations and generate revenue. Hence, we prefer to remain on the sidelines due to the lack of income visibility. Therefore, we recommend an ‘Avoid’ rating on the stock of SCRN at the closing price of CAD 0.075 on March 12, 2021.

Price Chart (as on March 12, 2021). Source: Refinitiv (Thomson Reuters)

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.