Kuniko Limited

Kuniko Limited (ASX: KNI) is involved in exploration activities with the projects situated in Norway. The company is focused on developing copper, nickel, and cobalt projects in Scandinavia. Further, KNI has diversified its interests to cater to both battery and technology metals. It aims to maintain a net-zero carbon footprint across its exploration, development, and production projects. KNI also aims for three fundamental metals for electromobility that comprises Cobalt, Nickel and Copper.

Financial and Operational Update: As announced on 6 December 2021, the first geochemical soil sample assays from the Skuterud Cobalt Project delivered fruitful results and vectors towards the target ‘fahlband’ zone. The 3D investigation of electromagnetic inversion data revealed the presence of a substantial conductor under the historic Middagshvile mine. On 8 November 2021, the company stated that Airborne geophysics undertaken by EMerald Geomodelling, and SkyTEM Surveys detected conductors at the Vangrøfta and Undal Copper Projects and the Skuterud Cobalt Project. Besides, the company has started trading on the ASX on 24 August 2021 and raised A$7.8 million (before costs) from the strongly supported IPO. The company holds A$7.1 million of cash on hand as of 30 September 2021. Moreover, KNI has an insurance funding agreement with Attest Finance Pty Ltd for $19k as of 30 September 2021 and has an outstanding loan balance with Vulcan Energy Resources Limited of $594k.  

Technical Analysis

Daily Price Chart:

Note: The purple color line in the chart depicts RSI (14-period). The sky-blue and red color lines show 21-Period SMA and 50-Period SMA respectively, while green color histograms at the bottom of charts represent weekly volumes.

KNI stock prices are trading below the falling trend line resistance zone at AUD 1.35 on the daily chart and facing the resistance of the same. Moreover, prices are trading below 21-period SMA and 50-period which may act as a crucial resistance zone for the stock. However, the momentum oscillator RSI (14-period) is trading near an oversold zone at ~34.95 level. An important support level for the stock, is placed at AUD 1.07 while the key resistance level is placed at AUD 1.35.

Stock Recommendation

The company is well capitalised with the capital structure leveraged to grow. Additionally, with an experienced Board and Management in place, the company focused on project development and growth strategy. By 2022, KNI intends to develop the portfolio of Norway-based exploration projects and fast-track the ESG activities, stakeholder engagement, innovation collaboration, and reporting. KNI also remains focused on assessing possible strategic growth opportunities that arise.

Therefore, considering the facts above, we give a “Watch” recommendation on the stock at the closing market price of A$1.21, down 5.099% as of 13^th December 2021.

Playside Studios Limited

Playside Studios Limited (ASX: PLY) is among the largest independent video games developers in Australia. It holds titles across several categories comprising self-published games based on original intellectual property (IP) and games developed in association with the most prominent studios globally, including Disney, Warner Bros, and Nickelodeon. Its portfolio comprises 52 titles delivered across four platforms: Mobile, Virtual Reality (VR), Augmented Reality (AR), and PC.

Financial and Operational Update: As per the press release dated 9 December 2021, PLY has fruitfully finished its $3 million share purchase plan declared on 17 November 2021. The share purchase plan got a strong response, with the company receiving total subscriptions of $12.97 million. On 8 December 2021, the company has entered into a strategic work-for-hire contract with Shiba Inu Games to build a multiplayer Collectable Card Game that is expected to be released on multiple platforms. As per the Q1FY22 quarterly activities report, the company has generated a record quarterly unaudited commercial revenue of $4.04 million, resulting in significant growth of 114% YoY and 29% QoQ. Meanwhile, PLY holds a cash position of $9.33 million as of 30 September 2021. Further, PLY has extended the current work-for-hire agreement with Facebook by six months and boosted the contract value by 90%. It has also finished the acquisition of the Dumb Ways to Die franchise for $2.25 million.

Valuation Methodology: EV/Sales Based Relative Valuation (Illustrative)

Technical Analysis:

Daily Price Chart

Note: The purple color line in the chart depicts RSI (14-period), while the yellow color line represents the trend line. The sky-blue and red color lines show 21-Period SMA and 50-Period SMA respectively.

PLY's prices are trading above an upward sloping trend line, indicating an upside direction for the stock. Prices recently broke a horizontal trend line resistance level AUD 0.910 by an upside and hovering around the breakout level, further supporting an up move. On the daily chart, the leading indicator RSI (14-period) is trading in positive territory at ~60.02 levels. The CMP is above the trend following indicators 21-period SMA and 50-period SMA, indicating a positive stance. Now an immediate resistance level for the stock appears at AUD 1.060, while support is at AUD 0.740 level.

Stock Recommendation

The stock has been valued using EV/Sales based relative valuation (on an illustrative basis), and the target price so arrived reflects a rise of low double-digit (in % terms). A slight premium has been applied to EV/Sales Multiple (NTM) (Peer Average), considering its investment growth strategies and strong growth in commercial revenue in Q1FY22. Meanwhile, the company will utilise the proceeds from the $25 million fully subscribed placement and the $3 million share purchase plan towards original IP, licensing and work-for-hire execution. Further, it will invest the proceeds in a new studio situated on the Gold coast, along with the team's expansion and R&D activities. Additionally, the achievements attained in Q1FY22 have placed the company in a better position to achieve a robust FY22. Moreover, the company holds a vital additional revenue opportunity driven by its robust and increasing pipeline of new gaming titles.

Considering the aforementioned factors, a “Speculative Buy” rating has been assigned on the stock at the closing price of A$0.90, up 3.448% as of 13^th December 2021.

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

Note 2: Investment decisions 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 analysis has been achieved and subject to the factors discussed above alongside support levels provided.

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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