Money Talks is Stockhead’s regular drill down into the sectors and companies that investors have their eye on right now.

Today, we hear from Finola Burke, managing director of RaaS Group.

RaaS specialises in issuer-sponsored research on ASX-listed companies, a significant proportion of which are in the tech sector.

The tech sector plunged in February and March during the market meltdown. But since bottoming out many stocks have been on the up again.

Burke notes a few stocks in particular have been resilient to COVID-19.

“The companies we are working with are doing relatively well in this environment,” she told Stockhead.

She also noted a number of stocks she covers have opportunities for more revenue in the months ahead.


BetMakers (ASX:BET)

Market Cap: ~$253m

Betmakers (ASX:BET) share price chart


From a share price perspective, few ASX stocks have had a better 12 months than BetMakers. In mid-April 2019 the horserace bookmaking stock sat at 2.6 cents but now sits at 44 cents.

Burke says it has been one of the more resilient stocks in the COVID-19 environment.

“These guys are providing the platform as price manager for the bookmakers and providing the race day controls for racing authorities – [such as] Racing Victoria and Racing NSW, so punters know that there’s an integrity being delivered to the races,” Burke explained.

BetMakers’ growth has accelerated after entering America. This will continue as fixed-odds betting is gradually embraced by individual states.

It also helps that horse-racing has continued throughout COVID-19 – albeit without spectators.

“It’s an exciting time for a company, having just done a deal in New Jersey,” Burke said.

“If you take a step back, fixed odds racing has only been allowed from sports betting perspective for a couple of years and New Jersey was one of the early adopters of that.

“They saw that that market in sports betting go from zero to half a billion dollars in volume – in betting terms – within 18 months.

“You’ll certainly see it [fixed odds betting for horse racing] go from nothing to quite a big market in a very short space of time.

So New Jersey to start, then we expect to see other states in America pick it up.”



Market Cap: ~$26m

DXN (ASX:DXN) share price chart


DXN builds and operates data centres. Since data centres facilitate the internet and everything that relies on it, demand is increasing year by year.

Also, new technologies such as drone delivery and autonomous vehicles requiring data centres close by.

Burke believes DXN chief exec Matthew Madden has made a difference since coming onboard in August last year. She noted DXN’s manufacturing facility in Perth had been particularly successful in winning contracts.

“That provides ongoing work for their manufacturing facility but also the opportunity to derive SaaS revenue from that in terms of the data they’re delivering out of that but also for maintenance services as well,” Burke said.

“The challenge is to fill in their Sydney data centre but we’d expect with growing demand for cloud to see that fill up. They’ve also acquired business in Tasmania which has delivered revenue and data for the business automatically.”

Burke also thinks substantial upside remains in the company if it can expand into regional areas.


Total Brain (ASX:TTB)

Market Cap: ~$29m

Total Brain (ASX:TTB) share price chart


The mental health software maker has had a wild ride in the last 12 months, but Burke was impressed by its quarterly report released earlier this week.

“They delivered fourth quarter cash receipts up 187 per cent from the same time last year,” she told Stockhead.

“That does include about a $1 million from what is a 3 year contract [paid as a] lump sump contract.

“If you exclude that it’s only 11 per cent. But we look at that business and say that’s ongoing revenue for them for the next couple of years.

“They also have good cost containment. Their cash burn was down substantially, around 49 per cent on same period last year and 56 per cent on [the March] quarter.”

“Our base case is $1.27 per share and that’s predicated on them only penetrating about 5 per cent of what we identified as a total addressable market that’s being delivered by the IBM platform.”

Last year, IBM agreed to integrate Total Brain’s technology into its own mental fitness platform.

“Since we started covering the stock they’ve been ticking every box in terms of what they’ve said they’re going to do and what they’ve delivered,” she said.


Finola Burke is the Managing Director at RaaS Group, an independent investment research house for small and micro cap companies. 

The views, information, or opinions expressed in the interviews in this article are solely those of the interviewee and do not represent the views of Stockhead.
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