Horror road trip may lead to some bargains

ARE we there yet? Most parents have heard the plaintive cry from the back seat as they navigate the scintillating expanses of the Hume Highway on school hols.

In the case of tech stocks, investors are also asking how much more of the highway-of-horrors correction there’s left to go. On the analogous Sydney to Melbourne route, have we reached the halfway point of Holbrook or are we nearing Seymour (or Goulburn, if you’re going the other way)?

There’s certainly a feeling the sector is on the home straight. Here are some unloved morsels at the Recovery Roadhouse, simmering under the bainmarie with the desiccated unbought dim sims:

Beam Communications (BCC): The only ASX-listed developer of mobile satellite equipment, Beam sells its off-the-grid communications devices in league with bandwidth providers and owns the SatPhone Shop chain. In joint venture with Canada’s Zoleo, Beam is rolling out a subscriptionbased device service and has also announced a new contract with longstanding partner the Nasdaq-listed Iridium Communications.

In early June Beam said revenue for the year to June 2022 would come in at $23m, 24 per cent higher. Shipping delays will result in underlying earnings more than halving to around $1m, before rebounding “materially above” $2.1m (the previous year’s earnings) in the current 2022-23 year.

Beam shares have lost more than half of their value in the past six months, valuing the company at a mere $20m (including $5m of cash).

Broker Pac Partners ascribes a “conservative valuation” of 32c a share compared with the current 23c, with a further 23c of “upside value”. This doesn’t include the Zoleo JV, which the Pac men reckon is worth 44c a share alone.

Dubber (DUB): Almost every customer service phone call is recorded these days, yet few companies could easily retrieve the convo from a dusty server in the back room if needed.

Dubber provides a subscription-based voice recording platform to enable companies not only to access the recordings, but add value to them with AI analysis.

Its route to market is via telco and network providers such as Telstra, Optus, Zoom, AT&T and Verizon.

Dubber saw its shares rocket to a peak of $4.11 in

September last year but they now languish at around 86c. Dubber’s March quarter revenue came in at $9.25m, 40 per cent up on the year with annualised recurring revenue of $55.1m (up 62 per cent). Dubber also burnt through $9.9m during the quarter and $30.44m over the first three quarters of the 2021-22 year. The current market cap of $222m is supported by just under $100m of cash. Dubber was overvalued a year ago, but arguably that’s not so now.

Spacetalk (SPA): Formerly known as MGM Wireless, Spacetalk has morphed from a provider of schools communication to its GPS-enabled watches for tweens and younger.

The Spacetalks allow only limited functions so that kids can talk to nanny/nanna rather than a net nasty. Priced at $160 to $280, the Spacetalks are sold in the main electronic retailers and the company has also cracked the European market. The company plans to launch a virtual mobile network in the US later this year. Spacetalk’s March quarter revenue climbed 11 per cent to $4.3m – $3.5m from wearables – with a gross profit of $2.9m (9 per cent higher). The June quarter numbers are due on Monday week. Spacetalk shares have declined almost 60 per cent over the past six months, with its $17m market cap including $8.7m of cash at last count.

Yep – we’re almost there!

This story does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.