Broker eyes rapid growth for this small cap ASX tech share

Euroz Hartleys believes small cap ASX tech share Tojee (ASX:YOJ) could solve challenges for the $9 trillion global logistics industry.

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Yojee Ltd (ASX: YOJ) is an ASX tech share offering a cloud-based, software-as-a-service (SaaS) logistics platform. The platform manages, tracks and optimises freight movements and logistics supply chains from sender to end-customer across borders and between logistics providers.

Yojee's customers include third-party logistics providers and logistics companies which benefit from powerful APIs (application programming interfaces) as well as enhanced visibility, accountability, and control. Following the company's December quarterly update, Euroz Hartleys initiated coverage on the small-cap ASX tech share with a speculative buy rating. 

December quarter highlights 

At the end of the December quarter, Yojee had eight enterprise countries signed up to operate its platform. Of these, four were revenue-generating, boosted by three global, top-10 freight forwarding clients. The company continued to see strong growth in cash receipts with an 18% increase to $235,000 in the December quarter and revenues of $204,000. To add some perspective, Yojee has a market capitalisation of just $186 million. 

Yojee noted that volumes during the quarter were impacted by unprecedented weather events and COVID-19 related lockdowns during the period, especially within the Philippines. It highlighted that the business will offer promotions and aggressively market into early CY21 to make up for the lower than anticipated volumes.

The company's balance sheet remains flexible, finishing the December quarter with $21.1 million cash, providing the company with a strong runway for growth. 

ASX tech share a speculative buy rating  

Hartley was broadly pleased with Yojee's progress on rollouts during the quarter, in addition to receiving an Indonesia expansion order from an existing client. The broker noted that it would have liked to have seen more quarter-on-quarter growth in volumes and revenues, but the company's dependency on the Philippines was impacted by unprecedented weather events and lockdowns.

Despite slightly missing expectations, the broker looks towards significant transaction volume growth in the coming quarters from recent and coming rollouts. In parallel, Yojee continues to provide commentary on a strong pipeline of additional opportunities to expand existing agreements and potentially sign new ones. 

The research note shed light on the global logistics sector and potential tailwinds for the ASX tech share. Hartleys cited that the global logistics industry is estimated to be worth around US$9 trillion annually, with the number of parcel movements alone forecast to surpass 100 billion this year and double to 200 billion by 2025. It pointed out that industry-wide changes are creating new demands and issues, driving rapid increases in digitisation, such that Yojee's comprehensive cloud-based logistics SaaS platform could be well placed to solve these issues. 

Hartleys identified that recently secured agreements show growing demand for Yojee's platform. These include agreements with three major global logistics companies which have $100 billion in combined revenues. The broker's bullish investment case is predicated on the rollout of its logistics platform with logistics heavyweights including Geodis, Kuehne+Nagel, and Maersk's in parallel to signing new SaaS agreements. Its speculative buy rating comes with a price target of 50 cents, almost triple its current share price of 17 cents.

Motley Fool contributor Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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