DISA Ltd

DISA Ltd | Buy

Target price: $0.02

June 22 close: $0.008

Broker: KGI Securities (Singapore), June 22

Since it invented the world's first anti-theft protection technology using encrypted codes on consumer electronic products, DISA has focused its resources on its anti-theft business and ramped down its other businesses.

Given that Walmart is using DISA's technology, it is time to boost market penetration. As the first mover providing a digital point-of-sale activation solution, it should get at least three top US retailers on its platform.

The key risks are that slow user adoption and a breach in DISA's encryption could lead to reputational damages and a fall in revenue. The concern is if DISA fails to scale and to cover its burn rate. It is at an inflection point and must convince retailers and suppliers to adopt its technology as the industry standard. If it cannot do so, debt and equity financing solutions could dry up as investors lose faith.

There could also be unexpected costs to improve its information technology infrastructure, and these may add to the cash burn rate. Like most tech firms at an inflection point, it is critical DISA maintains investors' trust.

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