As a provider of a suite of services related to personal identity management and biometrics, TOTM Technologies is one of a kind on the Singapore Exchange.
Though Singapore-incorporated, InterBIO's business was in Indonesia where it won an Indonesian national tender for a biometrics project way back in 2011. It has since been maintaining the country's national biometric system covering 200 million citizens. Below is KGI's research note on the most recent milestone -- a significant one -- of TOTM. Is a near-term future of profitability on the cards for TOTM? |
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TOTM Technologies Ltd (TOTM SP): Joining hands with Presight to scale solutions
- BUY Entry – 0.155 Target – 0.183 Stop Loss – 0.142
- The Group is an integrated solutions and services provider in personnel identity management and biometric technology. Its solutions leverage platforms from strategic partners and are applied to public and private projects across North America, Europe, Middle East, Asia Pacific, Latin America, and Africa. It manages and maintains one of the largest biometrics National ID databases in the world with about 200m enrolled citizens.
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Scaling up solutions in MENA and APAC. TOTM signed a strategic teaming agreement with Presight.AI, a G42 and Rafael Advanced Defense Systems JVCo, to develop and deploy proprietary technologies to deliver high performance biometric, AI capabilities and solutions to clients in MENA and Southeast Asia."The new agreement with Presight.AI will, in our view, surely help cement TOTM’s revenue growth trajectory and place it in good steam to return to profitability."
-- KGI
Specifically, the partners will be looking to develop hardware-less eKYC authentication and build new systems that may not require internet connectivity for biometric authentication. - Starting to see revenue traction. As at last update in January 2022, TOTM was in the midst of ramping up its operations, with 1H22 revenue surging 263% YoY to S$10.1m mainly on virgin contributions of S$8m from its biometrics business.
Pierre Prunier, CEO of TOTMImportantly, we observed that c.97% of revenue was derived from recurring sources.
Nonetheless, as part of its ramping up, TOTM remained loss making, extending losses to S$5.3m mainly on cost of sales of S$5.8m as well as general jump across salaries, legal and professional expenses. - Revenue traction to continue even as peers’ growth tapers. There is currently no coverage on the stock. Looking across horizontally, listed biometrics companies in Asia are few, with the bulk listed in western markets.
According to Bloomberg data, TOTM’s western peers reported median YoY revenue growth of just 14.5%. Notably, sectoral ROEs are negative, with slightly more than half of our peer list recording positive historical ROE.
The new agreement with Presight.AI will, in our view, surely help cement TOTM’s revenue growth trajectory and place it in good steam to return to profitability.