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Urbanise Secures Contract - Will it Stop the Share Price Slump?

Urbanise Secures Contract - Will it Stop the Share Price Slump?
Sep 15, 2015 By Simon Herrmann

Cloud-based service provider Urbanise Ltd (ASX:UBN) has announced that it secured a contract with South Aftrican Sigma Estate Management Services.

Sigma will use the Urbanise technology to manage its estate, facility and utility management services to Body Corporates and Owners in approximately 5,000 units and 1,200 new units close to completion.

Sigma is a South African real estate service provider focusing on the greater Johannesburg are as well as the Gauteng Province and smaller areas. Sigma promotes the gated community market as secure residential commercial and industrial properties to respond to the high crime rate in the country.

Urbanise CEO Ben Churchill commented on the partnership: “Sigma manages some of the largest sectional title schemes in the Gauteng Province and we are thrilled that they have selected our technology to enhance their service offering.” Ben Churchill emphasises the significance of this deal and calls it a “potentially significant market”.

Urbanise will receive variable platform usage fees on a monthly basis which will depend on the total usage and success of the platform.

At the end of August Urbanise released its FY15 full year results which showed a 96% increase in revenue to $10.2m and EBITDA of $2.1m. While revenue was slightly ahead of prospectus forecasts, however EBITDA and NPAT missed expectations.
Wise-owl’s Take

UBN’s share price tripled following the successful IPO in September 2014 to reach an all-time high of $1.60 on 5 August 2015. In the past two weeks UBN has declined more than 50% as retail investors try to make sense of the recent slump. Whilst UBN’s valuation incorporates a high degree of growth, it seems like the stock has gone a little ahead of itself. The average trading volume is very low and it appears that a couple substantial sellers have sold this highly illiquid stock just before certain shares came out from escrow. UBN is now approaching the 70 cent mark, which is the level the stock closed following the listing.

It would not surprise if the stock will need some time to recover from the recent selloff. However we are attracted to its rapidly expanding market share, cornerstone investors, and recent financial performance. Whilst sustained expansion is required to support its valuation, the capital growth outlook appears favourable. UBN will remain on Wise-owl’s watchlist.

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Simon Herrmann Author: Simon Herrmann Sep 15, 2015

Simon is a financial analyst at independent research firm Wise-owl specialised in small-mid cap growth opportunities and ethical investment opportunities. Simon's aim is to disrupt the cliché approach to investment decision making as he believes that socially and environmentally responsible behaviour is a necessity to long-term wealth creation. Simon has a deep fundamental understanding of the global financial landscape and has compiled 300+ research reports, valuations and corporate appraisals. Simon is commonly featured in major media outlets and his research is published weekly in The Australian.

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