Up 1226%: ASX’s best stock is one you’ve never heard of

Technology isn’t big on the Australian sharemarket, but it has provided investors with a stock that has soared 1,226 per cent this year.
Nanjing Night Net

Big Un, which uses its software to make promotional videos for restaurants, salons and other small businesses at lower costs, is the top performer this year among the almost 700 companies in Australia whose shares fetch at least $1 apiece.

A penny stock until June, Sydney-based Big Un is trading at more than $3 per share and is worth about $450 million.

It’s hard to pinpoint what changed Big Un’s fortunes, but it’s been raising sales projections regularly.

This month brought another revision, with the company forecasting revenue of at least $22 million for the December quarter, a 10 per cent increase from expectations in November.

“We have perfected our business model and hit traction,” said Big Un Chairman Hugh Massie, who signalled his bullishness when he bought $488,750 of shares at market price late last month. “Small businesses want video at a low cost and we are able to provide that through our combination of technology platform and operation structure.”

Big Un’s software helps reduce production costs by as much as 80 per cent, Moelis & Co. estimates, to a few thousand dollars for a short video. The company said it had 4,900 paying subscribers as of September, who on average each contributed $7,500 to quarterly revenue.

Founded by Executive Director Brandon Evertz in 2013 when he was just 19, Big Un listed on the local stock exchange a year later via a reverse takeover of former mining company Republic Gold.

The shares traded at less than 50 cents for the next 2 1/2 years before shooting up. They have retreated 39 per cent from their peak in November. The sell-off prompted the company to say its disclosures were up to date, but it didn’t give a reason for the decline.

Some investors have avoided the stock, saying Big Un doesn’t yet have a proven track record.

“Big Un is performing great, but most of its clients are young clients,” said Guy Carson, chief investment officer at Quick Brown Fox Asset Management. “We need to see retention rates before we know the growth is sustainable.”

Carson prefers Gentrack Group, which makes software for utilities companies and whose shares have climbed 81 per cent this year. About 32 per cent of his $20 million portfolio is invested in technology stocks.

Technology represents less than 2 per cent of the nation’s benchmark S&P/ASX 200 Index – in contrast to Wall Street’s S&P 500, which it dominates representing about 24 per cent of the index.

Big Un has said it plans to add videos of consumers reviewing businesses in the future. That would mean competing with the likes of TripAdvisor and Yelp, according to Moelis’s Keiran Hoare, the only analyst covering the company in data tracked by Bloomberg.

He recommends buying the shares, which he expects to reach $5.58 in a year. That would be a gain of another 83 per cent from its closing price on Tuesday.


This story Administrator ready to work first appeared on Nanjing Night Net.

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