Kinatico Ltd

ASX:KYP

Kinatico Ltd

ASX:KYP
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$0.150 (+3.4%)
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#62
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21
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Reports (4) My Report Forum Investors
Forum Topics KYP KYP Bell Potter Bullish

Pinned straw:
Rick
Added a month ago

Today (18/02/2026) James Mickleboro from The Motley Fool shared a note from Bell Potter on Kinatico. They are bullish on the business with a $0.40 price target (trimmed from $0.45). https://www.fool.com.au/2026/02/18/bell-potter-says-this-exciting-small-cap-asx-share-can-rise-100/

Bell Potter notes that the Know Your People solutions provider has released its half-year results and reported first-half EBITDA of $2.7 million. This was below Bell Potter's forecast but broadly in line with market expectations. The broker said:

1HFY26 EBITDA of $2.7m was 10% below our forecast of $3.0m but consistent with VA consensus. Key driver of the miss versus our forecast was lower capitalised R&D than forecast ($1.7m vs BPe $2.0m). Revenue of $17.6m and cash of $10.4m had already been flagged. There was no interim dividend and we did not expect any.

Importantly, software-as-a-service (SaaS) revenue continued to grow strongly, rising 49% year on year to $9.7 million and is now accounting for 53% of total revenue. Bell Potter also highlights that the company generated positive free cash flow of $0.7 million and remains debt free.

'Disrupting, not being disrupted'

Bell Potter's note is titled Disrupting, not being disrupted, reflecting its view that Kinatico is well positioned in the evolving AI landscape. The broker highlighted:

Kinatico does not provide guidance but did say it expects: A re-acceleration of SaaS revenue growth as the sales pipeline for the new Kinatico Compliance product grows and converts; Continued improvement in operating margins; Positive operating cash flow being maintained; and Ongoing investment in platform development to support long-term growth. The company also highlighted that its early adoption of AI makes it an AI disruptor and its competitive position is protected by multiple reinforcing layers including having AI at the core of its new Kinatico Compliance (KC) product.

Shares tipped to double

According to the note, the broker has retained its buy rating on the small-cap ASX share with a trimmed price target of 40 cents (from 45 cents).

Based on its current share price of 19 cents, this implies potential upside of 110% for investors over the next 12 months.

Commenting on its buy recommendation, Bell Potter said:

We have rolled forward our EV/EBITDA valuation by a year – so that FY27 is now the base – and apply a 10x multiple to our forecast. We have also increased the WACC we apply in the DCF from 10.3% to 10.6% due to an increase in the risk-free rate from 4.25% to 4.5%. The net result is an 11% decrease in our target price to $0.40 which is still around double the share price so we maintain our BUY recommendation.
Potential catalysts include the Q3 update in April where we expect further q-o-q growth in SaaS revenue but the key catalyst is more likely to be the Q4 update where we expect more significant growth driven by the successful conversion of some large customers to the new KC platform.


Held IRL and SM
Slomo
Added a month ago

After thinking some of The Economics of AI through, see prior post here – https://strawman.com/forums/topic/12732#post-42017

I was surprised and pleased to see that KYP seem to have done / be doing exactly this. Their new Product Kinatico Compliance (KC) is effectively an AI native product and while they are coming from a legacy business model with a legacy product (CV check), they are running hard into this new AI reality.

Their business restructure is more of a hybrid approach though, where they are getting their people trained up and tooled up and confident on AI (88% so far they claim, sounds good, not sure what this is worth).

So this does not put AI at the centre of the business to leverage the low cost, high speed, high accuracy prediction capability from AI being augmented with human (or AI agent) judgement to make better decisions.

I expect this sort of fundamental business transformation would be too difficult for all but the most fervent AI acolytes.

In any case they were at pains to point out that their KC product is effectively AI native, so if this works out as The Economics of AI suggest it should, it should provide a nice little case study of how other businesses can harness an AI first approach within / alongside their existing business.

Will be interested to see how this plays out. Interesting enough for me to take a position and stay tuned to how this evolves.

It also feels a little de-risked as they have plenty of cash in the bank, are FCF break even, have a slowly melting legacy business that will not go to zero any time soon, have a fast growing (~50% pcp) SaaS / AI product (not seat based), mission critical solution (compliance reg tech) for their sticky customers (0% churn on SaaS product), incumbent is manual (MS XL) inhouse solutions, Mgmt are aligned with almost 10% held across Directors and KMP, Their SAM (Servicable TAM) just increased by 3x as a result of KC launch, they are now providing an enterprise grade solution to SMB’s with good initial take up and pipeline uptick, it doesn’t screen cheap due to legacy business drag on growth and profitability (this should diminish quickly in the coming years).

Disc: Held

12
Dangles
Added a month ago

I know we're probably in a new paradigm right now when it comes to SAAS software, but this one seems like it's getting into the good value territory if they can execute with the opportunity in front of them.

Quibbling about a slight lack of operating leverage is fair, but surely the bigger story here is since launching Kinatico Compliance, their sales pipeline has grown from it's usual $5m-$7m up to $10m in a short space of time.

If revenue growth inflects upwards again in H2 as they're projecting I think this will catch a bid pretty quickly.

Cheers to @Tom73 for the great notes on the 1H as well

15
rh8178
Added a month ago

Thanks @Rick for sharing. I have a similar view on Kinatico as Bells, but I was disappointed by the HY numbers. They have an improving EBITDA and net profit margin, but I was expecting there to be more operating leverage. Direct costs and employee costs aren't showing that leverage kicking in. And if you look at the increase in SAAS revenue (close to $3m improvement), it didn't drop it to the bottom line fast enough for what I was thinking. Or put another way if the SAAS contribution should have mostly gone to the bottom line, what is going on in the legacy business? It wasn't clear, and maybe it's been a long reporting season already and I'm getting grumpy...anyway, thesis still in tact, just...

Held IRL and SM.

14