Taylor Collison has put recommendations on two ASX stocks
\nCompliance platform stock Kinatico gets an Outperform rating
\nAnd life insurance stock ClearView Wealth is a Buy<\/p>\n
Kinatico to outperform after strategy shift<\/p>\n
Taylor Collison has slapped an OUTPERFORM recommendation on Kinatico (ASX:KYP)<\/a>, with a 15c price target (vs current price of 12c).<\/p>\n Kinatico is a regulatory technology (Reg-Tech) workforce software business, primarily focusing on daily workforce management through its OnCite<\/em> platform.<\/p>\n The company acquired Bright People Technologies<\/em> for $15.3m in 2021, a move described as transformative for KYP as it allowed an accelerated move into the workforce compliance sector.<\/p>\n KYP is primarily targeting the healthcare, energy & utilities, education and professional & financial services sectors to simplify their compliance management.<\/p>\n Taylor Collison says the company\u2019s strategic shift from essentially verification services to higher-margin recurring revenue business<\/strong> captured its interest in the stock.<\/p>\n The transition to this new high-quality SaaS revenue business model has increased customer stickiness for KYP, evidenced by zero customer churn in the last 18 months, along with higher quality revenue streams.<\/p>\n \u201cThe enhanced product mix and focus on workforce compliance management means KYP\u2019s SaaS capabilities are more entrenched in the day-to-day operations of customers,\u201d wrote Taylor Collison.<\/p>\n \u201cEstimating KYP is only 15% through this conversion, we see an extended growth horizon of existing customers transitioning to SaaS before even accounting for any new customers.\u201d<\/p>\n Taylor also believes that there are strong regulatory tailwinds<\/strong> for the Kinatico\u2019s business.<\/p>\n \u201cRecent amendments to aged care, healthcare and infrastructure related regulations such as the Aged Care Act 1997 are providing a formal and accelerated tailwind for KYP\u2019s monitored compliance suite,\u201d said the note from Taylor.<\/p>\n KYP, according to Taylor, is becoming a go-to provider to simplify and streamline compliance needs, replacing the manual and antiquated status quo often recorded in Microsoft Excel.<\/p>\n Meanwhile, KYP\u2019s substantial cash balance of ~$10m at December 31st 2023 places it in an ideal position to fund revenue growth via organic and inorganic means.<\/p>\n In terms of valuation, Taylor says that KYP trades at a discount to peers on a FY23 EV\/Revenue multiple.<\/p>\n \u201cWith the compliance management software space expected to grow at 10.9% CAGR, we value KYP at $0.15 per share using a blended peer analysis and DCF methodology.<\/p>\n \u201cIndustry growth is further complemented by KYP\u2019s scalable platform and strong customer relationships,\u201d said Taylor Collison.<\/p>\n Separately, Taylor Collison also has a BUY rating<\/strong> on ClearView Wealth (ASX:CVW)<\/a><\/strong>, with a 12-month price target of 83c per share<\/strong> (vs the current price of 58c).<\/p>\n ClearView is a life insurance provider with three main products \u2013 pure life risk cover products, investment linked products, and bundled products.<\/p>\n The total life risk insurance market in Australia is around $16 billion<\/strong> \u2013 with ~$10 billion in individual risk products (sold via financial planners), and ~$6 billion in group risk products (via super funds or employers).<\/p>\n According to Taylor Collison, there are several long term drivers supporting the continued growth of the Australian life risk insurance market<\/strong>: Population growth; ageing population which means life insurance holders will hold their policies longer; and rising household wealth.<\/p>\n ClearView is also set to benefit from regulation changes.<\/p>\n \u201cWe see the current regulatory landscape as ideal for a disruptive medium sized player [like ClearView],\u201d said the note from Taylor Collison.<\/p>\n Specifically, Taylor pointed to three qualities that should benefit smaller players like CVW, versus legacy life insurers:<\/p>\n \u201cModern, unified systems should mean CVW is more agile in bringing new products to market, making changes to existing products and other efficiencies.<\/p>\n \u201cSmaller players will often have less legacy processes and other constraints when looking to introduce new products or business approaches.<\/p>\n \u201cAnd larger incumbents are likely to have an existing book of policies that feature legacy wordings \u2013 which are often more vague and lead to undesirable outcomes.\u201d<\/p>\n CVW is also poised to benefit from both higher interest rates and higher inflation, Taylor says.<\/p>\n The brokers said its valuation target is also based on ClearView\u2019s target to generate $400m in-force premiums by FY26 \u2013 up from $325m in FY23.<\/p>\n \u00a0<\/p>\n \ufeff<\/span><\/span><\/p>\n \u00a0<\/p>\n The views, information, or opinions expressed in the interview in this article are solely those of the broker and do not represent the views of Stockhead.<\/em><\/p>\n Stockhead has not provided, endorsed or otherwise assumed responsibility for any financial product advice contained in this article.<\/em><\/p>\n <\/span><\/p>\n The post MoneyTalks: SaaS stock Kinatico rated a Buy, while life insurer ClearView to benefit from multiple tailwinds<\/a> appeared first on Stockhead<\/a>.<\/p>","protected":false},"excerpt":{"rendered":"<\/h2>\n
ClearView a Buy on insurance tailwinds<\/h2>\n
Kinatico and ClearView share prices today:<\/h2>\n\n