Overview: Cape Range Limited (“Cape Range”, “the Company”) is an Australian software company focused on accounting and business intelligence services. The Company owns Biztrak Business Solutions (“Biztrak”), an Asia-focused company offering software solutions to 18,000 companies with over 37,000 users. Cape Range acquired Biztrak in June 2017 and listed on the ASX in November 2017 after raising $5.6 million. During FY2017 the Company reported a loss of $4.1 million which includes a one-off reverse acquisition cost and share-based payment expenses totalling $3.8 million.
Catalysts: Biztrak is on track to shortly provide an update on Phase 1 of its new cloud-based SaaS product Biztrack Online as per its prospectus guidance. Completion of this R&D milestone is a catalyst and puts the company in a strong position to launch the product in H2 CY18. As the Company prepares for the commercial rollout, strong uptake of the platform could deliver higher earnings margins and significantly strengthen Biztrack’s recurring revenue base. A tight capital structure and low overheads provide a favourable foundation for growth, while a strong funding position and strategic relationship with major shareholder iFREE allows the company to assess strategic opportunities.
Hurdles: The commercial success of Biztrack Online remains to be validated and there is no guarantee that forecasted synergies can be realised. Despite Biztrack’s low cash burn rate, the Company’s reliance on external capital may not entirely be eliminated as historic results were somewhat volatile. Entry barriers to the industry are limited to IP and know-how and the Company may be subject to increasing competition in an already competitive sector.
Investment View: Cape Range offers speculative exposure to demand accounting software services in Asia. The upcoming launch of Biztrack Online is a catalyst and could significantly improve the Company’s recurring revenue base and facilitate international expansion. Operational risks and competition are the primary hurdles. Cape Range is on track shortly provide an update on key prospectus targets and successful completion will allow the Company to rapidly transition towards a SaaS revenue model. Biztrack’s revenues have historically been lumpy and somewhat limited in size and scope, which the Company plans to address with Biztrack Online. Cape Range has a low cash burn rate and remains well funded to pursue strategic growth initiatives if they arise. As Cape Range achieves major milestones we initiate coverage to monitor its growth potential.
THE BULLS SAY
THE BEARS SAY
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