##{"id":85385,"date":"2020-03-13T09:17:22","date_gmt":"2020-03-12T22:17:22","guid":{"rendered":"https:\/\/www.fnarena.com\/?p=85385"},"modified":"2020-03-13T09:17:23","modified_gmt":"2020-03-12T22:17:23","slug":"research-domacom-recapitalised-for-growth","status":"publish","type":"post","link":"https:\/\/staging.fnarena.com\/index.php\/2020\/03\/13\/research-domacom-recapitalised-for-growth\/","title":{"rendered":"RESEARCH: Domacom Recapitalised For Growth"},"content":{"rendered":"

Pitt Street Research suggests growth should pick up for Domacom after the arrival of cornerstone investor HALO Technologies.<\/em><\/p>\n

By Pitt Street Research<\/p>\n

The last four months have seen DomaCom Limited ((DCL)) steadily strengthening its balance sheet. The company not only secured a cornerstone investor, HALO Technologies, but also completed a rights issue, resulting in a combined cash inflow of $6m.<\/p>\n

In our view, this increase in cash balance should help revive the growth in FuM (Funds under Management), which has remained subdued in the past few months.<\/p>\n

New market channel to drive adoption rate<\/strong><\/p>\n

Coupled with the capital infusion of $3m from the rights issue, the agreement with HALO Technologies provided DCL with a new B2C strategy to reach the market.<\/p>\n

HALO operates an investment research platform and has over $2bn in funds under advisory. This translates into a large addressable market for DCL.<\/p>\n

We believe this should help drive the adoption of DCL’s fractional investment product, since most of HALO’s customers are well-informed and sophisticated investors.<\/p>\n

Recalibrating valuation to $0.29–0.38 per share<\/strong><\/p>\n

Keeping in mind the recent restrained growth in the company’s FuM and share dilution due to recapitalisation, we have recalibrated our valuation to $0.29–0.38 from $0.35–0.46 previously.<\/p>\n

While our basic assumptions for the DCF calculation remain the same, we have reconsidered our growth assumptions around FuM.<\/p>\n

However, we believe that armed with the recent capital infusion, as well as a new B2C strategy, DCL’s FuM should witness substantial growth in the medium term, and thus drive a re-rating of the stock.<\/p>\n

Download the full report<\/strong><\/p>\n

Earlier today the report above was released by Pitt Street Research for which FNArena is a partner in distribution. The full report can be accessed here: https:\/\/www.fnarena.com\/index.php\/pitt-street-research\/DCL\/<\/a><\/p>\n

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