Hong Kong based Integrated Media Technology Limited (IMTE) is a 3D autostereoscopic display (ASD) technology company that develops glasses-free 3D equipment and services. The company’s products have broad application in the industrial sector and software development. As one the budding companies in the Internet of Things (IoT) space, IMTE has gained 108.5% over the past year.
IMTE also provides 3D super workstations for content conversion of 2D videos to 3D mode for the TV and movie industry; and VisuMotion, a set of software designed for 2D to 3D conversion, as well as 3D content creation. In addition, it sells and distributes switchable glasses; and offers 3D consultancy, management, and trading services. The company was formerly known as China Integrated Media Corporation Limited and changed its name to Integrated Media Technology Limited in October 2016.
The company has been working towards strengthening its foothold in the IoT space over the past couple of months, with the most notable development being its acquisition of a 70% equity stake in Shenzhen Koala Wisdom Fire Engineering Co. Ltd. in February.
Here’s what we think could shape IMTE’s performance in the near term:
IMTE’s unique business model has caused investors to speculate about its potential entry into the non-fungible token space. The company closed a direct offering of 708,000 ADS for net proceeds of $4.58 million yesterday. It plans to use the proceeds primarily for product development and financial research. Its stock has gained 69% year-to-date because NFT enthusiasts expect IMTE to launch a digital art segment soon, giving the brimming demand NFTs in the global markets.
Entering the NFT business is projected to be extremely profitable for IMTE. NFT sales have exceeded $500 million as of March 17, with the biggest sale being valued at $69 million (Beeple Art). Over the past seven days, nonfunglibe.com has reported NFT sales worth $41.94 million.
In terms of its trailing-12-month ev/sales, IMTE is currently trading at 51.66x, which is significantly higher than the industry average 4.57x. The company’s trailing 12-month price/sales ratio of 23.85 is 462.8% higher than the industry average 4.24.
Weak Profitability and Financials
But, despite having a $43.19 million market capitalization, the company’s trailing-12-month revenue has yet to cross the $1 million mark. Also, IMTE’s trailing-12-month gross profit, operating income, and net profit values are negative, while its book value per share is negative $1.73. Its ROE and ROA are negative 677.22% and 40.37%, respectively, which is substantially lower than industry averages.
The company’s growth trajectory has remained negative over the past three years; its revenues and total assets have declined at rates of 51.4% and 43.7%, respectively, over this period. And its EPS has declined 62.2% year-over-year.
In addition, IMTE lacks adequate operating income to meet its debt obligations, which places the company’s solvency at risk. Its trailing-12-month total debt stands at $4.74 million, while its long-term debt/total capital ratio is 6.26%. In terms of liquidity, IMTE is bleeding cash from its operations, as evident from its trailing-12-month net operating cash flow of $2.92 million. Its respective current and quick ratios of 0.21 and 0.04 reflect substantial liquidity risk.
POWR Ratings Reflect Bleak Outlook
IMTE has an overall D rating, which equates to Sell in our proprietary POWR Ratings system. The POWR Ratings are calculated considering 118 different factors, with each factor weighted to an optimal degree.
IMTE has an F grade for Value, Quality, and Stability. Along with relative overvaluation and inadequate financials, the stock has a beta of 2.39, indicating significant volatility. These factors combined justify the grades.
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The company’s impressive price performance and potential entry into the NFT space has been attracting investors to the stock. However, there is no concrete evidence regarding IMTE’s potential entry into NFT space. Also, as most NFT transactions are administered using cryptocurrencies, profits are highly taxable under IRS rule because non-fungible tokens are mostly classified as “collectibles.” Thus, we think IMTE is best avoided now.
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IMTE shares were trading at $5.55 per share on Monday morning, down $0.38 (-6.41%). Year-to-date, IMTE has gained 42.31%, versus a 5.68% rise in the benchmark S&P 500 index during the same period.
About the Author: Aditi Ganguly
Aditi is an experienced content developer and financial writer who is passionate about helping investors understand the do’s and don'ts of investing. She has a keen interest in the stock market and has a fundamental approach when analyzing equities. More...
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