Goldmoney Inc. (TSX: XAU) is engaged in precious metal sales to its clients which includes arranging delivery and storage of precious metals for its clients, coin retailing, lending etc.

Key Updates:

• Launch of digital storage drive solution: Recently, the company reported the launch of its digital storage drive solution in beta through its subsidiary company Totenpass Inc. The above would allow its clients with the permanent storage of precious digital data, and hence eliminating any future dependence on the internet and additional storage.

• Lucrative Macros: The company offers its clients to purchase, hold or take delivery, sell, and exchange into other precious metals and provides a choice of one or more of fifteen-high security bullion vaults operated by professional vaulting companies. Due to the hassle-free nature of the business, the above business model is likely to grow in the coming days, supported by improved demand dynamics. Moreover, elevated gold prices are likely to support the company’s business.

Q2FY22 Financial highlights:

• XAU announced its quarterly result, wherein the company posted its revenue of CAD 69.013 million, as compared to CAD 243.608 million in pcp.
• Gross profit declined to CAD 2.844 million, slide from CAD 7.565 million in Q2FY21. The decline was primarily due to lower income, partially offset by lower cost of sales.
• The quarter was marked by higher operating expenses of CAD 6.470 million v/s CAD 4.572 million in pcp. The quarter witnessed significantly higher General & administrative costs (CAD 2.673 million v/s 0.366 million in pcp), partially offset by a decline in the service provider fees, advertising & promotion costs.
• Net loss for the period stood at CAD 3.283 million, as compared to the net income of CAD 7.509 million in pcp.

 Q2 FY22 Income Statement Highlights (Source: Company Report) 

Risks: The company reported a slide in its income and profitability on y-o-y basis, and the continuation of the above trend is likely to dampen the company’s upcoming performance.

Stock Recommendation:

In the recent past, the group has transitioned its operations to Canada from Jersey, while the management expects the full benefit of expected cost savings and efficiencies in the subsequent reporting periods. Hence, we expect a possible decline in the input costs in the coming quarters, which would subsequently support the company’s profitability. The stock of XAU is available at a considerably lower valuation of 0.4x on a TTM basis, as compared to the industry (Technology) median of 4.5x. Hence, considering the aforesaid facts, we give a ‘Speculative Buy’ rating on the stock of XAU at the current market price of CAD 2.10 at 9:45 am Toronto time on December 15, 2021. 

Technical Analysis Summary

One-Year Technical Price Chart (as on December 15, 2021). Analysis by Kalkine Group

*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.