The fund manager of the listed investment company (LIC) Clime Capital Ltd (ASX: CAM) believes there are a few ASX shares that are opportunities.
Mach7 Technologies Ltd (ASX: M7T)
The company says it provides vendor neutral archive technology to improve enterprise imaging data storage, sharing and interoperability across healthcare enterprises. Patent-awarded mobile technology extends this advanced enterprise imaging solution technology to mobile devices.
Clime pointed out that in the third quarter of FY21 the ASX share saw record cash receipts of $8.4 million and positive operating cash flow of $3.3 million. The fund manager also noted that the ASX share announced it had been awarded the ‘Global Enterprise Imaging Solutions Product Leadership’ by Frost and Sullivan.
The LIC said Mach7 had $18 million of net cash and a healthy contract pipeline heading into the fourth quarter.
Electro Optic Systems Hldg Ltd (ASX: EOS)
EOS describes itself as a leading Australian technology company operating in the space and defence markets. Our products incorporate advanced electro-optic applications based on EOS core technologies in software, laser, electronics, optronics, gimbals, telescopes and beam directors, and precision mechanisms.
Some uses include space debris, satellite management as well as remotely controlled weapon systems.
Clime pointed out that the recent FY21 first quarter update included $25 million of operating cashflow on $51 million of cash receipts. However, Clime noted that it has $41 million of cash on the balance sheet, as well as a material portion of a $120 million defence systems contract to hit the cash line in the second quarter of 2021. Finalisation of this contract was delayed by travel restrictions in 2020.
The fund manager believes that once this issue has been resolved, the market will refocus on the ASX share’s “significant” growth opportunities.
The company recently gave guidance for 2021, saying that there is potential for material contract awards in the second half of 2021, for which negotiations are underway.
EOS said that in regards to its order backlog, the backlog of executed orders at 27 May was $428 million in revenue terms and $535 million in cashflow terms. It’s expecting cash receipts to be strong as contract assets convert to cash, in a reversal of cash deployment. Revenue is expected to increase in 2021 to between $235 million to $245 million, representing growth of more than 30%.
EOS’ underlying earnings before interest and tax (EBIT) before SpaceLink costs is expected to be between $20 million to $25 million. EBIT after SpaceLink costs is currently expected to be between $3 million to $8 million.
Mineral Resources Limited (ASX: MIN)
Mineral Resources is another business that is in the Clime portfolio.
It’s a business that provides mining services. Mineral Resources also has a portfolio of mining operations across different commodities including iron ore and lithium.
Climate believes that the ASX share is a beneficiary of the good conditions for iron ore miners both through opportunities through mining services work and from iron ore mining the company’s own right.