TechnologyOne Ltd

This report is an updated version of the report published on 14 July 2023 at 1:06 PM (GMT+10)

Section 1: Company Overview and Fundamental Insights

1.1 Company Overview: TechnologyOne Ltd (ASX: TNE) is an Australia-based enterprise software company catering to corporations, government agencies, local councils, and universities. The company, which has locations across six countries, provides a global software-as-a-service (SaaS) enterprise resource planning (ERP) solution that transforms the way organisations interact with their customers and communities. Kalkine’s Technology Report covers the Investment Highlights, Management Insights, Key Financial Metrics, Risks, Technical Analysis along with the Valuation, Target Price, and Recommendation on the stock.

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

1.3 Top 10 Shareholders: The top 10 shareholders together form ~37.55% of the total shareholding. Mactaggart (John Dugald) and Masterbah Pty. Ltd. are holding a maximum stake in the company at ~7.67% and ~4.43%, respectively.

1.4 Key Metrics: The company reported a return on invested capital of 15.0% in 1HFY23 as compared to 14.4% in 1HFY22. Below is captured the trend of gross profit and current ratio since 1HFY21:  

Section 2: Business Updates, Financial, and Liquidity Highlights

2.1 Business Updates

2.2 Results Highlights of 1HFY23 (For the Period Ended 31 March 2023)  

2.3 Historical Financial Trend

Section 3: Key Risks and Outlook

Section 4: Stock Recommendation Summary

4.1 Price Performance and Technical Summary

The stock has witnessed a decline of ~2.23% in a month, and over the last 6 months, it has gone up by ~12.02%. The stock has a 52-week low and 52-week high of AUD 10.390 and AUD 17.120, respectively and is currently trading above the average of a 52-week high-low average.

4.2 Fundamental Valuation

Valuation Methodology: Price/Earnings Multiple Based Relative Valuation (Illustrative)

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

Note 1: Past performance is neither an indicator nor a guarantee of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is July 14, 2023. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Dividend Yield may vary as per the stock price movement.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

Disclaimer

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