Facedrive Inc

Facedrive Inc (TSXV: FD) is a multi-faceted company that operates in the technology sector. The company is fulfilling its mandate through a number of verticals that either leverage its existing technologies or project synergies with existing lines of business through its five verticals, including “Facedrive Rideshare”, its rideshare business, sustainable e-commerce platform “Facedrive Marketplace”, food-delivery service “Facedrive Foods”, e-social platform “Facedrive Social” and its contact-tracing and sustainable health services business under “Facedrive Health”.

Key highlights

• Acquired EcoCRED: Recently the company announced it had completed the acquisition of 100% of the equity ownership of EcoCRED, from Exelorate Enterprises, LLC, a wholly owned subsidiary of Exelon Corporation (NASDAQ: EXC) at a price of USD 1.0 million. We believe the acquisition would open new avenues to the growth of the company. 

• Food delivery vertical showing substance:Recently, the company announced that its food delivery vertical “Facedrive Foods” is experiencing substantial growth, wherein total orders exceeded 5,000 per day during mid-April 2021, demonstrating a 5% month-over-month growth since February 2021.  The company partnered with approximately 5000 restaurants with over 280,000 active users registered on a platform across 19 cities in Canada. 

• The growing number of users and drivers:The Company managed to grow the number of drivers and users during 2020. The number of registered Facedrive Rideshare drivers in Canada increased from 10,376 as of December 31, 2019, to 18,964 as of December 31, 2020. The number of Rideshare users grew from 34,031 as of December 31, 2019, to 64,224 as of December 31, 2020.

• Getting investment from Ontario’s government:Recently, the company announced that TraceSCAN, the COVID-19 wearable contact-tracing solution developed by its Facedrive Health vertical, has been endorsed with an investment by the Ontario Ministry of Economic Development. It would be receiving CAD 2.5 million under this agreement.

Financial overview of FY2020 (In Canadian dollars)

Source: Company

• The company announced its financial results, wherein it posted an increase in revenue at CAD 3.9 million, compared to CAD 0.6 million in the previous corresponding period (pcp). The Company generates substantial revenue from Facedrive Rideshare and Facedrive Foods. 

• Total Operating expenses stood at CAD 22.0 million, as compared to CAD 5.1 million in pcp.  

• The company reported an operating loss of CAD 18.1 million, higher than a loss of CAD 4.5 million in the previous corresponding period, due to a higher operating expense, along with higher amortization expense during the period. 

• The company reported a net loss of CAD 17.7 million, against CAD 6.9 million in pcp. The increase in net loss was primarily attributable to the growth and development of the Company during Fiscal 2020 and the costs associated with such growth and development. 

• Cash and cash equivalent stood at CAD 3.9 million, while total assets were at CAD 27.9 million. 

Risks associated with investments

The Company’s operating expenses have increased in the recent past, which is a reason for concern for the company. The solutions, which are provided by the company can be replaced by other information technology firms, and hence might lead to price competition. 

Stock recommendation

The TraceSCAN solution's idea is promising, and proper implementation of the project would bring strong business prospects for the company. As per the Company, other applications like Facedrive Food, Facedrive Health and Facedrive Marketplace would generate revenues in the upcoming quarters, which is a key positive. The company is already witnessing growth from its food delivery vertical and rideshare vertical, where the number of orders executed, and the number of users and drivers are increasing, respectively. Furthermore, recently it acquired EcoCRED and we believe the acquisition would open new avenues to the growth of the company. Based on technical analysis, the stock has support at CAD 12.2 level. Hence, considering the aforesaid facts and decent growth prospects, we recommend a ‘Speculative Buy’ rating on the stock at the closing price of CAD 15.01 on May 5, 2021.

*Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock if the price closes below the support level.

One-year Price Chart (as on May 05, 2021). Source: Refinitiv (Thomson Reuters)

Titanium Transportation Group Inc

Titanium Transportation Group Inc (TSXV: TTR) is assets-based transportation and logistics firm that provides services like, truckload, dedicated, cross-border trucking services, freight logistics, warehousing, and distribution. The company is organized into two segments namely, the Truck Transportation segment and the Logistics segment.

Key Highlights 

• Boosting liquidity: The corporation recently completed a public offering of 9.33 million common shares at a price of CAD 3.75 per common share. Titanium issued approximately 6.66 million common shares from treasury for gross proceeds of CAD 24.99 million, and an amount of approximately 2.66 million Common Shares were exchanged for gross proceeds of CAD 10.0 million under the offering. The management stated that the net proceeds from the Treasury Offering are expected to be used to pay down debt and for working capital purposes.

• Healthy guidance for 2021: On the back of acquisition combined with forecasted organic growth, the management expects revenue to increase to approximately CAD 330 million and EBITDA to increase to approximately CAD 33 million in 2021, which is a key positive. 

• Expanding footprint in the US: The organization's third US Freight Brokerage office, in Chicago, IL, recently opened for business. The Chicago position is critical to Titanium's strategic strategy to extend into the lucrative US freight brokerage market, as Illinois is a major US logistics centre, with about 25% of all U.S. freight traffic going through. Furthermore, the company is on track to expand operations to five US locations within three years of launching Titanium American Logistics 

• Event Update: The company would release its Q1 2021 financial results on May 11, 2021. 

Financial overview of FY2020

Source: Company 

• In FY2020, the company’s reported revenue increased by 20.2% to CAD 200.7 million, against CAD 167.0 million in the previous corresponding period. The increase in revenue was a result of strong growth in the company's U.S. Logistics segment.
• Total expenses increased to CAD 177.6 million, against CAD 148.5 million. Carriers and independent contractors cost increased to CAD 115.0 million V/s CAD 82.6 million in pcp.
• The company posted higher EBIT at CAD 23.0 million, against CAD 18.4 million, primarily due to higher revenues and by cutting many operating expenses.
• Net income increased to CAD 6.2 million, against CAD 1.5 million in the previous corresponding period. The rise in net income was mainly due to higher revenues, partially supported by minimized expenses and lower finance cost. 

Risks associated with investment

The Company's business is subject to several risk factors, including duration and impact of the COVID-19 pandemic to the global economy. Further, the company is exposed to forex risks as majority of the group’s revenue comes from the abroad market, especially U.S Dollars. 

Valuation Methodology (Illustrative): EV to Sales 

Note: All forecasted figures and peers have been taken from Thomson Reuters 

Stock recommendation

2020 was one of the most challenging year in history, reflecting the global impact of the COVID-19 pandemic. Notwithstanding these challenges, the company delivered a solid financial and operating performance, achieving record fourth-quarter and full-year revenue. These results once again demonstrate the robustness and strength of the company’s operating platform. Furthermore, the management has reaffirmed its FY2021 guidance, and its increasing footprint in the US are key positives. Based on technical analysis, the stock has support at CAD 3.23 level. Therefore, based on the above rationale and valuation, we recommend a “Speculative Buy” rating at the closing price of CAD 4.00 as on May 5, 2021. We have considered Aecon Group Inc, TFI International Inc. as the peer group for the comparison.

One-year Price Chart (as on May 05, 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.