It's already March 2022. Where has the year gone? With all of the volatility and declines in the stock market, there may be some attractive ASX tech shares to consider.
Worries about inflation and interest rates have given investors a lot to think about since the start of 2022.
Plenty of ASX tech shares have been sold down. Are some of them opportunities?
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TechnologyOne Ltd (ASX: TNE)
The TechnologyOne share price has fallen by 18% since the start of the year.
This business provides global enterprise resource planning (ERP) software. It's working on growing its offering through a software as a service (SaaS) solution in the cloud.
It's currently rated as a buy by the broker Morgans with a price target of $13.73.
The company has substantial long-term goals to help grow the business over time.
In FY21, it saw net profit before tax growth of 19% to $97.8 million. The company says that it has a $145 million annual recurring revenue (ARR) runway to move from on-premise to SaaS by FY26. Management says that the quality of the SaaS revenue is very high because it has a recurring contractual nature, combined with a very low churn rate of around 1%.
The goal is for the total ARR to reach more than $500 million by FY26.
The ASX tech share is also expecting to grow its profit before tax margin to 35% or more in the next few years. It was 31% in FY21.
There are three things that the company pointed to which could help with this.
It said that cost reductions reflect the efficiencies from the transition to SaaS.
There would be benefits from rebalancing investment and headcount from on-premise to growth areas.
Finally, it will maintain COVID-inspired remote implementations and digital user groups.
Betashares Asia Technology Tigers ETF (ASX: ASIA)
This is an exchange-traded fund (ETF) listed on the ASX which aims to give investors exposure to the Asian technology sector.
It holds 50 businesses in the Asian tech industry, outside of Japan.
BetaShares says that due to its younger, tech-savvy population, Asia is surpassing the West in terms of technological adoption and the sector is anticipated to remain a growth sector.
Some of the businesses in the ASX tech share's portfolio includes Taiwan Semiconductor Manufacturing, Samsung electronics, Tencent, Alibaba, Meituan, Infosys, JD.com, Netease, Pinduoduo and SK Hynix.
There are four sectors that have a double-digit weighting in the ETF – internet and direct marketing retail (25.3%), semiconductors (22.3%), interactive media and services (17.7%) and tech hardware, storage and peripherals (13.7%).
The biggest four allocations geographically are: China (46.7%), Taiwan (24.1%), South Korea (17.8%) and India (7.2%).
It has been a rough last 12 months for the Betashares Asia Technology Tigers ETF share price. The ASIA ETF has dropped 34%, with the drop of the valuations of the underlying businesses.
