2 tech IPO’s that excite me

It has been another strong year for technology stocks in Australia – with IT stocks on the S&P/ASX 200 Info Tech (ASX: XIJ) index returning 30% over the last 12 months, despite the growing sentiment that many listed tech companies may be overpriced at their current valuations.

I believe that the best investments of the next decade will be in the technology sector, which is why I’m so excited about the initial public offerings of Nanoveu Limited (ASX: NVU) and Shekel Brainweigh Limited (ASX: SBW).

Nanoveu Limited

Nanoveu is a Singaporean company, which was established in 2012 and is committed to the development and commercialisation of nanoimprint science applications.

The company is offering 22.5 – 30 million shares at $0.20 per share, in the aim to raise between $4.5 million and $6 million. Its prospectus outlines an implied valuation of $25 million – $27 million for Nanoveu.

Nanoveu’s signature product is EyeFly3D, which is a protective film that enables real-time, affordable and easy to use 3D rendering, allowing users to view 3D multimedia without needing 3D glasses and enabling the instant conversion of 2D photos and videos on smartphones and tablets to 3D format.

I believe EyeFly3D could be hugely popular if the company executes a successful launch campaign, due to our growing desire for more realistic experiences when viewing images, videos and while gaming, as is evidenced by the rapid growth of augmented reality and virtual reality functionality within other tech applications.

Nanoveu is also currently developing a prototype for another product called EyeFyx, which is a thin film that can be applied to mobile and tablet screens to enable users who normally require glasses to read digital displays without the need for their glasses.

As EyeFly3D is yet to be launched to market, Navoveu reported a loss of $639,311 in 2017, although I believe once the product is launched globally it has great potential to achieve rapid sales growth, by tapping into the massive mobile accessories market. If Navoveu successfully develops EyeFyx, it will also have the potential to cater to the growing proportion of the population who are elderly – as this segment of the population is more likely to be visually impaired.

Shekel Brainweigh Limited

Shekel Brainweigh is the holding company of an established Israeli group, which has been creating and distributing advanced weighing technology solutions for the retail, healthcare and manufacturing markets for nearly 50 years.

The company is offering 29 million shares at $0.35 per share, in the aim to raise $10.2 million. Its prospectus outlines an implied valuation of $48 – $49 million for the company.

Shekel Brainweigh has an established track record of profitability in its existing operations, having generated revenue of US$18.2 million and an operating profit of $2.5 million in 2017.

However, what really excites me about the business is its development of new innovative solutions in the retail sector, such as its Product Aware Service Technology, which instantly identifies the quantity and location of shelf items to provide retailers with real-time insight into on-shelf inventory levels. The Promotion Bay is another new Shekel Brainweigh solution, which provides retailers and consumer goods vendors with extensive real-time data on the performance of promotion campaigns and consumer behaviour. The company is also developing Innovendi, a fully automated vending machine.

I believe this technology could help ‘brick and mortar’ retail address existing profitability challenges and compete with e-commerce through leveraging data and automation, to improve the efficiency and speed of operational processes and create a more targeted and engaging retail experience for consumers.

Foolish takeaway

Shekel Brainweigh is expected to start trading on the ASX on October 26, while Nanoveu is expected to join the ASX on November 1. I put both Shekel Brainweigh and Nanoveu up there with WiseTech Global Ltd (ASX: WTC), REA Group Limited (ASX: REA) and Nextdc Ltd (ASX: NXT) as the Australian tech stocks that I am most excited about for FY19.

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Motley Fool contributor Gregory Burke has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of WiseTech Global. The Motley Fool Australia has recommended REA Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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