1. Poseidon Nickel Limited (Recommendation: Speculative Buy, Market Cap: ~$284.94 million)

Poseidon Nickel Limited (ASX: POS) is a nickel sulphide exploration and development company with three projects located within a 300km radius of Kalgoorlie in the Goldfields region of Western Australia.

• FY21 Result Highlights: For FY21, the company reported a total comprehensive loss of $10.93 million, as compared to the loss of $12.85 million in FY20. During the year, the company drilled Golden Swan mineralised zone to explore the potential for a further high-grade ore source at Black Swan. It also progressed the Windarra Gold Tailings Project Definitive Feasibility Study, which demonstrated robust economics.
• Cash and Debt Scenario: As at 30 June 2021, the company had a cash balance of $7.9 million and total lease liabilities of about $0.6 million.

Debt to Equity Trend (Source: Analysis by Kalkine Group)

• Outlook: Looking ahead, the company is focused on the exploration and eventual restart of its established nickel operations in Western Australia where project risk capital and operating costs are low. The company is targeting its first nickel production in 2022. The company expects an uplift in overall nickel consumption as demand for stainless steel increases and the EV market continues to grow, particularly in Europe, the USA, and China.

SWOT Analysis:

Stock Recommendation:

• Over the last one month, the stock of POS has corrected by ~13.91% and is trading lower than the average 52-week price level band of $0.055 and $0.160.
• The company is discussing potential partnerships to fast-track development and monetise asset.
• Key Risks: Fluctuations in the Price of Nickel, Exploration Related Risks, COVID-19 Uncertainties, etc.
• Considering the company’s progress in exploration programs, expected uplift in nickel consumption, modest outlook, current trading level and key associated risks, we give a “Speculative Buy” rating on the sock at the current market price of $0.098, as on 8 October 2021, 12:58 PM (GMT+10), Sydney, Eastern Australia.

POS Weekly Technical Chart, Data Source: REFINITIV

2. Imagion Biosystems Limited (Recommendation: Speculative Buy, Market Cap: ~$78.40 million)

Imagion Biosystems Limited (ASX: IBX) is involved in the development of new non-radioactive and safe diagnostic imaging technology to detect cancer and other diseases earlier and with higher specificity.

• H1FY21 Result Highlights: In 1HFY21, the company reported revenue and other income of $168,643, up from $117,093 reported in the year-ago period. During the period, the company reported a loss of $1.45 million, compared to a loss of $1.74 million in 1HFY20. The decline in losses was primarily due to a reduction in R&D expenditure.
• Cash and Debt Scenario: Due to receipt of $1.6 million from the exercise of options in 1H2021 and $2.6 million in research & development tax incentives, the company’s cash balance grew to $13.9 million at end of June 2021, as compared to $13.2 million at December 2020. Current ratio for H1FY21 stood at 13.33x, up from 2.68x in H1FY20.

Current Ratio Trend (Source: Analysis by Kalkine Group)

• Outlook: Looking ahead, the company expects its development expenditures and staff costs to increase as it progresses and advances its development pipeline. The company believes that its research on prostate cancer and its collaboration with Patrys Limited in relation to brain cancer imaging, will support and strengthen the strategic value of its molecular imaging business. The company is exploring the use of a Patrys’ deoxymab with its nanoparticles for brain tumour imaging and diagnosis.
  

SWOT Analysis:

Stock Recommendation:

• Over the last three months, the stock has corrected by ~18.68% and is trading lower than the average 52-week price level band of $0.062 and $0.225.
• On a TTM basis, the stock is trading at a price-to-book value multiple of 5.8x, lower than the industry average (healthcare) of 7.7x, implying undervaluation.
• Key Risks: Failure of Clinical Trials/Study, Regulatory Risks, COVID-19 Uncertainties, etc.
• Considering the rise in a cash balance, the company’s progress in clinical studies, modest outlook, current trading level, valuation on TTM basis, and key associated risks, we give a “Speculative Buy” rating on the stock at the current market price of $0.074, as on 8 October 2021, 11:30 PM (GMT+10), Sydney, Eastern Australia.

IBX Weekly Technical Chart, Data Source: REFINITIV

3. Buddy Technologies Ltd (Recommendation: Speculative Buy, Market Cap: ~$55.13 million)

Buddy Technologies Ltd (ASX: BUD) is a IoT and cloud-based technology company that operates two core businesses – its Commercial Business and Consumer Business.

Key Takeaways from FY21 Results:

• Decline in Revenue: For FY21, the company reported total customer revenue of $28.77 million, down by 7% on the previous year, due to store closures, city lockdowns, supply chain disruptions and material increases in shipping costs and delays.
• Decline in Core Operating Expenses: Core operating expenses declined by 20% YoY to $16.05 million.
• Improved Bottom Line: Net loss for FY21 stood at $12.54 million, improved from the loss of $45.27 million in FY20, favourably impacted by the forgiveness of debt related to the acquisition of $15.47 million.

Cash And Debt Scenario: As at 30 June 2021, the company had cash and cash equivalent of $2.09 million, slightly down from the cash of $2.5 million as at 30 June 2020. Further, the company had total debt (including borrowings and lease liabilities) of $27.5 million. Current ratio for FY21 stood at 0.71x, up from 0.31x in FY20.

Current Ratio Trend (Source: Analysis by Kalkine Group)

Outlook: Amazon recently commenced the sale of the company’s LIFX Smart Switch, which is a high gross margin product. Looking ahead, the company expects its LIFX Colour products be on retail shelves in the coming holiday period. In FY22, the company is focused on growing its markets around the world and manufacturing its products more cost efficiently. 

SWOT Analysis:

Stock Recommendation:

• Over the last three months, the stock has corrected by ~62.79% and is trading lower than the average 52-week price level band of $0.015 and $0.077, offering a decent opportunity for accumulation.
• On a TTM basis, the stock is trading at a Price-to-Book Value multiple of 1.7x, lower than the industry median of 4.1x, thus seems undervalued.
• Key Risks: Foreign Currency Risk, COVID-19 Uncertanities, Technology Disruption, etc.
• Considering the improvement in FY21 bottom line, expected benefits from the launch of LIFX Smart Switch 2-Button Glass, current trading level, valuation on TTM basis, and key associated risks, we give a “Speculative Buy” rating on the stock at the current market price of $0.016 as on 8 October 2021.

BUD Weekly Technical Chart, Data Source: REFINITIV

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.

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.

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