RAS Technology Holdings Limited provides integrated data, content, and software as a service (SaaS) solution to the racing and wagering industries in Australia, the United Kingdom, the United States, Sri Lanka, and internationally. It offers wholesale data, content distribution, wagering technology and services, specialist data services, digital and media, and consulting and integrity services to racing bodies and authorities, wagering operators, media and digital organizations, and retail and private clients. The company was founded in 1999 and is based in Kingston, Australia.

Australia

RAS Technology Holdings Limited

Technology

The company does not pay dividends at all, or it pays them sporadically. There have only been a few years with dividend payments in the past ten years. 

RTH.AX reported revenue of AUD 19mn in the last 12 months, up 38% from FY23. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS fell 100% from FY23 to AUD 0.00. Market expects EPS to reach AUD 0.01 in FY25.

Over the last six months, the stock performance has varied, with an increase following a drop. The stock's price trend wasn't definitive when matched against its global counterparts from the same sector and industry (as depicted above). Within the past six months, its performance has trailed this peer group's by 39ppts and its growth accelerated by 13ppts in the past month. This is equally valid for peers from the same country and industry. Given the stock's valuation versus its peers, its total price movement is neither favourable nor unfavourable.

The company has reported weak EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 5.5% in the last 12 months, up from 3.4% in FY24. 

Historically, RTH.AX has reported very poor net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled 2.1%, a growth from -2.4% in FY24. 

RAS Technology Holdings Limited reported a return on equity (RoE) of 2.8% in the last 12 months, up from -2.8% in FY24. The market consensus projects an RoE of -13.2% in FY25, again behind its peers. 

Another important profitability metric, return on assets (RoA), amounted to 1.9% in the last 12 months, an increase from -2.0% in FY24. The market analysts predict that RoA will be -9.2% in FY25, again weaker than its peers. 

In the last 12 months, the return on capital employed (RoCE) grew to 2.4%, below the peers. The consensus estimate for FY25 for RoCE is -33.6%, again behind the peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been -0.7 in the past several years. This ratio implies a fragile shareholder value creation. 

The institutional, legal, and compliance risks associated with the company's country are minimal. In combination with stringent business standards, shareholder rights are very highly protected.

RTH.AX has very poor trading liquidity. It will take considerable time for the average private investor to sell a common position under normal market conditions. Liquidity is very unstable and becomes extremely unfavourable on the days with the lowest activity. The trading volume mostly stays the same even under highly turbulent market conditions. Another factor to consider is the substantial number of days with zero trading volumes, i.e., without any ability to sell a position. The stock has a tiny market capitalisation, which usually makes its trading liquidity erratic and unpredictable. 

No other major risks have been identified.

The risk of default is moderate. We note resilient historical revenue growth, low margin volatility, strong debt servicing capacity, adequate interest coverage, solid cash flow generation, and an favourable capital structure, among the positive credit factors. Among the negative credit factors, we point to weak positions in its industry, bleak profitability, negligible return on capital, and poor working capital management.

In highly turbulent market conditions, RTH.AX is exceptionally volatile. In other words, the stock will be among the worst-performers in times of extreme market volatility or shocking company news. Standalone, the worst-day losses (less than 1% of the time) will likely be critical. 

In normal market circumstances, RTH.AX is exceptionally volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will change quite unpredictably. The stock's losses on its worst days (less than 1-5% of the time) will range from critical to immense. 

Based on key historical and expected multiples, the stock is overvalued relative to its peers. In particular, the stock is overpriced on P/E, of fair value on EV/EBITDA, overvalued on P/FCF. 

RAS Technology Holdings Limited

A$ 0.78

2

RAS Technology Holdings Limited

A$ 0.78

2

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

A$ 0.78

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