Altium Limited

Section 1: Company Overview and Fundamentals Insights

1.1 Company Overview

Altium Limited (ASX: ALU) develops and sells computer software for the 3D design of electronic products and embedded systems. The company has two reportable segments: Boards and Systems and Nexar. The company was listed on ASX on 4 August 1999

1.2 The Key Positives, Negatives, Investment Highlights, and Risks

1.3 Top 10 Shareholders: The top 10 shareholders together form ~44.4% of the total shareholding. Pinnacle Investment Management Group Ltd and Mirkazemi (Aram) are holding a maximum stake in the company at ~8.68% and ~7.24%, respectively.

1.4 Key Metrics: In 1HFY22, ALU recorded an ROE of 8.9%, compared to the industry median of -1.4%. The net margin for the period stood at 22.3%, higher than the year-ago period figure of 20.7%. Below plotted the gross margin and EBITDA margin trend.

Section 2: Business Updates and Financial Highlights

2.1 Business Updates:

2.2 Results Highlights of 1HFY22 (Period Ended 31 December 2021): in 1HFY22, Altium 365 monthly active users and monthly active accounts increased by 54% and 29%, since August 2021, respectively. Looking forward, ALU expects its margin to climb to ~38%-40% by FY25-FY26.

Section 3: Key Risks and Outlook:

Section 4: Stock Recommendation Summary

4.1 Price Performance and Technical Summary

4.2 Fundamental Valuation

Valuation Methodology: P/E Multiple Based Relative Valuation (Illustrative)

Markets are trading in a highly volatile zone currently due to certain macroeconomic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: The reference data in this report has been partly sourced from REFINITIV

Note 2: Investment decisions should be made depending on the investors’ appetite for upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the analysis has been achieved and subject to the factors discussed above alongside support levels provided.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level at which the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: In general, it is a level to protect further losses in case of any unfavourable movement in the stock prices.

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