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Co. Plans to Leverage its 96,000 Merchants to Boost Revenue
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The Quick Take

  • Research Capital Corp. initiated coverage on Givex Information Technology Group Ltd. with a "Buy" rating and CA$3.20/share target price.
  • Givex signed agreement to acquire Kalex Equipment Services in January 2022.
  • Integration of Kalex into Givex's operations will help expand the number of installations in Canada.
  • The company's products and strategy offer potential for consistent top line revenue growth out several years.
  • The firm's expansion efforts are based highly on profitability and cash flow generation and not just rapid sales growth which should reward long-term investors.
  • Research Capital stated current market valuation is attractive and offers a meaningful margin of safety as Givex shares are trading at a large discount to its peers based upon valuation multiples.
  • Even with a low existing revenue base, Givex is already generating a positive free cash flow due to its robust profitability margins.
  • "Givex has a high probability of becoming a 'multibagger' in a disruptive industry."

In a Jan. 30 research note, Research Capital Corp. Special Situations Analyst Venkata Velagapudi and Research Associate Jack Keating stated that fully integrated technology platform services company Givex Information Technology Group Ltd. (GIVX:TSX), which provides POS, payment processing, gift cards, analytics, and other cloud-based services to merchants in more than 100 countries, entered into a definitive agreement to acquire Kalex Equipment Services.

The report stated that Givex Information Technology Group (Givex) has a major concentrated presence in North America and commented that with the addition of Kalex, the firm will increase its ability to expand installations across Canada.

The analyst wrote that the company has a "high probability of becoming a 'multibagger' in a disruptive industry," as its business it highly focused on delivering profitable growth.

The report from Research Capital explained that other companies in the industry have made efforts to expand revenues and market share at the expense of cash burn and shareholder dilution. Though some of these may become profitable over time, Research Capital stated that it believes that "the companies which grow consistently with a focus on profitability have a higher probability of turning out to be good investments over the long-term, and that Givex falls into this category."

According to the report, Givex started in business over 20 years ago as a technology services provider for an online gift card company with around $60 million in yearly turnover. The analysts stated that the firm's emphasis on steadily generating free cash flow together with is increase in customer locations and average revenue per user (ARPU) is a winning combination.

Research Capital highlighted that more than 98% of Givex's 96,000 customer locations have yet to implement POS and payment processing services, which it sees as an enormous potential for increasing total sales and ARPU.

The Research Capital report stated that at present "Givex is trading at a significant discount compared to its peers based on all the valuation multiples." The firm believes that as Givex increases its revenues and improves profitability, the valuation gap will begin to gradually close.

Research Capital Corp. stated it is initiating Coverage on Givex Information Technology Group Ltd with a "Buy" rating and CA$3.20 target price.

Givex Information Technology Group Ltd. shares trade on the Toronto Stock Exchange under the symbol "GIVX" and last closed for trading at CA$0.85 on Wednesday, Feb. 2, 2022.


1) Stephen Hytha compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. He or members of his household own securities of the following companies mentioned in the article: None. He or members of his household are paid by the following companies mentioned in this article: None.
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5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the decision to publish an article until three business days after the publication of the article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Givex Information Technology Group Ltd., a company mentioned in this article.

Disclosures for Research Capital Corp., GIVEX Information Technology, Jan. 30, 2022

1. Relevant disclosures required under IIROC Rule 3400 applicable to companies under coverage discussed in this research report are available on our web site at
2. This Issuer has generated investment banking revenue for Research Capital Corp.
I, Venkata Velagapudi, certify the views expressed in this report were formed by my review of relevant company data and industry investigation, and accurately reflect my opinion about the investment merits of the securities mentioned in the report. I also certify that my compensation is not related to specific recommendations or views expressed in this report.
Research Capital Corporation publishes research and investment recommendations for the use of its clients. Information regarding our categories of recommendations, quarterly summaries of the percentage of our recommendations which fall into each category and our policies regarding the release of our research reports is available at or may be requested by contacting the analyst.
Each analyst of Research Capital Corporation whose name appears in this report hereby certifies that (i) the recommendations and opinions expressed in this research report accurately reflect the analyst’s personal views and (ii) no part of the research analyst’s compensation was or will be directly or indirectly related to the specific conclusions or recommendations expressed in this research report.

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