Volpara Health Technologies Limited

This report is an updated version of the report published on the 28 September 2022 at 3:43 PM GMT.

Section 1: Company Overview and Fundamentals Insights

1.1 Company Overview

Volpara Health Technologies Limited (ASX: VHT) is an advanced medical equipment & technology company that improves the screening quality using artificial intelligence for the early detection of breast cancer. VHT software also provides clinicians feedback on breast density and compression that enable their patients regarding personalised breast care and risk assessment.

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

1.3 Top 10 Shareholders: The top 10 shareholders together form ~36.73% of the total shareholding. Harbour Asset Management Limited and Allen (Roger) are holding a maximum stake in the company at ~12.11% and ~7.33%, respectively.

1.4 Key Metrics: The gross profit in FY22 was around NZD 23.82mn, which increased from NZD 18.05mn in FY21. VHT's revenue segment remains dominated by breast subscription-based revenue, which comprised 90% of the group's revenue in FY22 compared to 86% in the prior year. Below is captured the trend of Asset Turnover Ratio and Debt-to-Equity:

Section 2: Business Updates and Financial Highlights

2.1 Business Updates:

2.2 Results Highlights of 1QFY23: The company recorded Contracted Annual Recurring Revenue (CARR) of USD 23.7mn in 1QFY23, up around USD 1.5mn from 4QFY22. VHT continued to sign new contracts under its strategy of focusing on large customer contracts.

2.3 Strategy Update: The company has successfully completed its strategic review and remains on track to focus on its core capabilities and strengthen its competitive advantage by driving growth from high-margin products. Further, the new set of clear guiding principles will aid the company in reducing customer acquisition costs and improve customer support infrastructure.

Section 3: Key Risks and Outlook:

Section 4: Stock Recommendation Summary

4.1 Price Performance and Technical Summary

4.2 Fundamental Valuation

Valuation Methodology: EV/Sales Per Share 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 not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is September 28^th, 2022. 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.

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.

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