Lim & Tan Securities analyst Ng Yong Rui has initiated his coverage of Audience Analytics 1AZ with a “buy” recommendation and a target price of 42.5 cents.
Audience Analytics listed on the Singapore Exchange’s (SGX) Catalist board in September 2021. It is a holding company that provides exhibitions, conferences, digital and print media, and business analytics services through its subsidiaries.
In his initiation report dated March 9, Ng says that with a dividend yield of 4.1% supported by a robust free cash flow yield of 14%, Audience Analytics is a “rare value-growth gem” with a highly scalable business that has compounded its earnings at a 2018 to 2022 compound annual growth rate (CAGR) of 28%.
For the FY2022 ended Dec 31, 2022, the company’s earnings saw a 35% y-o-y jump in earnings to $5.69 million from FY2021’s $4.21 million on the back of a 43.1% increase in revenue.
Audience Analytics, through its subsidiaries, provides exhibitions, conferences, digital and print media, and business analytics services that support companies across Asia at different stages of their growth. The company has a sizable presence in Singapore, Cambodia, China, Hong Kong, India, Indonesia, Macau, Malaysia, Philippines, South Korea, Sri Lanka, Taiwan, Thailand, United Arab Emirates and Vietnam.
Ng notes that Audience Analytics holds the intellectual property (IP) to several established business impact assessment and recognition (BAR) programmes, such as SME 100 and HR Asia, which attracts participation from thousands of corporations annually, including several Fortune 500 companies.
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“In addition to being a very lucrative cash flow generative business, the monetisation of the IPs could be potential share price catalysts should the group choose to sell any of its IP one day,” he adds.
In the meantime, Ng notes that Audience Analytics is expected to continue with its strong earnings growth profile due to the current low penetration of its existing markets. The group has been growing its average number of participants per BAR programme by 10% to 24% per annum since FY2018.
Other potential catalysts include plans to enter new markets, significant cross-selling synergies between BAR programmes, and potential mergers and acquisitions (M&A) as Audience Analytics taps into its war chest for inorganic growth, he says.
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Ng’s sum-of-the-parts (SOTP) target price of 42.5 cents is based on a conservative 5.4x ex-cash FY2023 price-to-earnings ratio (P/E), adding the group’s strong net cash position of 10.3 cents per share or 35% of its market cap as at the end of FY2022.
His initial target price has an implied FY2023 P/E of 10.6x, or a 60.3% discount to Audience Analytics global peers’ 2022 P/E of 26.7x.
As at 11.34am, shares in Audience Analytics were trading flat at 30.5 cents.
