1. DigitalX Limited (Recommendation: Speculative Buy, Market Cap: ~$45.12 million)

DigitalX Limited (ASX: DCC) is a technology and investment company focused on blockchain consulting and digital asset funds management.

• June 2021 Quarter Highlights: During the June quarter, the company delivered a positive cash flow of $36k, driven by 178% QoQ growth in cash receipts to $738k. The rise in cash receipts was due to the receipt of the March quarterly fees from the Funds Management division. DCC recorded $8.7 million of revenue (unaudited) in the June 2021 quarter, up by 1,122% on the previous quarter. As of 30 June 2021, DCC had liquid assets consisting of listed digital assets, cash, and liquid unlisted investments of $33.027 million.

Cash Receipts Trend (Source: Analysis by Kalkine Group)

• Rebound in FUM: In the month of August 2021, the company witnessed a strong rebound with new FUM applications of $1.1 million, coinciding with a rebound in the price of Bitcoin and other digital assets in recent weeks.
• Outlook: Looking ahead, the company is focused on establishing innovative funding opportunities, including the Digital Finance CRC and the RegTech innovation grant application. Further, it intends to secure risk managed revenues by accessing yields from digital assets held on the Company’s balance sheet.

SWOT Analysis:

Stock Recommendation:

• Over the last six months, the stock has been corrected by ~28.4% and is currently trading lower than the average 52-week price level band of $0.035 and $0.135, offering a decent opportunity for accumulation.
• The company intends to further develop and grow over its FY22 as it takes advantage of the growth opportunities now presenting.
• On a TTM basis, the stock of DCC is trading at a price to book value multiple of 2x lower than the industry (Technology) median of 4.4x.
• Key Risks: Regulatory Changes, Technology Risks, Fluctuations in the Prices of Crypto Currencies, etc.
• Considering the rise in cash receipts, growth in digital asset treasury value, valuation on TTM basis, current trading level and associated key risks, we give a “Speculative Buy” rating on the stock at the current market price of $0.062, as on 27 August 2021, 12:20 PM (GMT+10), Sydney, Eastern Australia).

DCC Daily Technical Chart, Data Source: REFINITIV

2. Poseidon Nickel Limited (Recommendation: Speculative Buy, Market Cap: ~$361.12 million)

Poseidon Nickel Limited (ASX: POS) is a nickel sulphide exploration and development company that owns the Windarra, Black Swan, and the Lake Johnston Nickel Projects.

• Progressing the Development of Golden Swan: During the June 2021 quarter, POS completed the 465 metres Golden Swan drill drive and continued the drilling at the project. Notably, several assay results returned high-grade nickel intersections.
• Received Strong Support for Placement: For its $22 million placement, the company received strong support from existing and new institutional investors and retail investors. POS has also announced a Share Purchase Plan (SPP) to raise further $3 million. The proceeds of the placement and SPP will be used to fund the exploration drilling at Golden Swan to explore the Southern Terrace and parallel structures.
• Cash and Debt Scenario: As at 31 December 2020, the company had cash of $20.09 million and total lease liabilities of around $0.719 million. Due to the expenditure incurred on the exploration activities, the cash balance was reduced to $7.9 million in June 2021 quarter.

Current Ratio Trend (Source: Analysis by Kalkine Group)

• Outlook: Looking ahead, the company is focused on delivering the maiden Golden Swan resource, continuing the drill testing of Southern Terrace, and moving ahead with the Final Investment Decision (FID) on its high-grade nickel inventory at Black Swan. The company is also looking forward to undertaking mining and production studies to consider the potential recommencement of operations at Black Swan.
  

SWOT Analysis:

Stock Recommendation:

• Over the last one month, the stock has corrected by ~14.81%.
• The stock is currently trading higher than the average 52-week price level band of $0.049 and $0.160.
• After obtaining all the assay results, the company intends to prepare a maiden resource which it plans to release late in the September 2021 quarter.
• Key Risks: Exploration Related Risks, Fluctuation in the Price of Nickel, COVID-19 Uncertainties.
• Considering the progress of the company’s ongoing exploration programs, decent exploration results, robust balance sheet, and associated key risks, we give a “Speculative Buy” rating on the stock at the current market price of $0.115, down by ~4.167% as on 27 August 2021.
  
  

POS Daily Technical Chart, Data Source: REFINITIV

3. Envirosuite Limited (Recommendation: Speculative Buy, Market Cap: $196.99 million)

Envirosuite Limited (ASX: EVS) is engaged in the development and sale of environmental management technology solutions. The company provides its solutions across the Air, Noise, and Water segments, and serves 500 customers worldwide, including BHP, Thames Water, Tata, Lendlease, etc.

• Improved Financial Performance in FY21: For FY21, EVS reported a total ARR of $46.5 million, up by 8.1% on the previous year. Further, its client sites increased to 373 in FY21, up 13.4% on FY20. During the year, EVS launched a new EVS Aviation platform, ANOMS X, which is in use by 30+ Airports. Statutory revenue for FY21 stood at $48.6 million, up 104% YoY in FY20.

Revenue Trend (Source: Analysis by Kalkine Group)

• Cash and Debt Scenario: As at 30 June 2021, the company had a cash and cash equivalent of $17.6 million, and total lease liabilities and other borrowings of $3.95 million. Current ratio for FY21 stood at 2.09x, up from 1.66x in FY20.
• Outlook: For FY22, the company is focused on leveraging brand and product innovation to drive customer awareness, demand generation, and retention. Further, it plans to Combine machine learning and EVS industrial environmental intelligence IP to deliver unique insights and efficiencies.

SWOT Analysis:

Stock Recommendation:

• The stock of EVS has provided a return of ~39.13% in the last three months and is trading slightly higher than the average 52-weeks price level band of $0.087 and $0.252.
• Looking ahead, the company is focused on achieving significant improvement of gross profit through cost out, process improvement and product consolidation.
• On a TTM basis, the stock is trading at a Price to Book multiple of 1.7x, lower than the industry median of 2.7x.
• Key Risks: Foreign Exchange Risk; COVID-19 Uncertainties, Technology Disruption, etc.
• Considering the company’s improved financial performance in FY21, launch of new EVS aviation platform, decent outlook, valuation on TTM basis and associated key risks, we give a “Speculative Buy” recommendation to the stock at the current market price of $0.160, down by ~3.031% as on 27 August 2021.

EVS Daily Technical Chart, Data Source: REFINITIV

Note 1: The reference data in this report has been partly sourced from REFINITIV.

Note 2: Investment decision should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and subject to the factors discussed above. 

Technical Indicators Defined:  

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

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