Lithium Australia NL (ASX: LIT):

LIT caters to battery technology, lithium chemicals, caustic lithium conversion with two operating segments namely, Tenement exploration and evaluation, and Processing technology. LIT was ASX listed on October 30, 2007.

Financial and Operational Updates: As announced on January 19, 2022, LIT shareholders have paid the balance unpaid on 1.871 million partly paid ordinary shares in the company. On January 17, 2022, LIT announced that its recent geochemistry and aeromagnetic programs completed by Charger suggest multiple swarms of lithium-caesium. The company’s battery recycling division has expanded its operations in Victoria. It had sought a land use permit from Wyndham City Council. With this recycling facility, the company is rightly positioned to cater to the increased sales volume as a result of the Battery Stewardship Scheme.

In September 2021 quarter, LIT posted negative operating cash flows of $2.72 million and closed the quarter with a cash balance of $12.72 million.

Technical Analysis: LIT's prices broke an upward sloping trendline by the downside on November 22, 2021, and since then trading below the same trend line, indicating the possibility of a downward movement. On the weekly chart, the trend-following indicators 50-period SMA and 20-period SMA are placed above the CMP, supporting a negative stance. The leading indicator RSI (14-period) is trading below mid-point at ~45.10 levels. Now the next important support level for the stock is at AUD 0.0990, while resistance is at AUD 0.1350 level.

Considering the technical levels, nil cash receipts from customers, sizeable operating cash outflows, investing in this stock at such uncertain levels should be taken with a calculated approach, hence a ‘Watch’ stance is suggested. The stock was analyzed as per the closing price of AUD 0.110 per share as of 27^th January 2022.

Daily Technical Chart – LIT

Source: REFINITIV 

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

Fat Prophets Global Contrarian Fund Ltd (ASX: FPC)

FPC is an investment company with a concentrated portfolio of listed securities across the globe. It invests in equities, commodities, currency, cash, and derivatives with an aim of increasing the long-term performance outcomes. FPC was listed in ASX on March 22, 2017. It holds a market capitalization of $46.79 million as of January 27, 2022.

Financial and Operational Updates: As per the announcement on January 21, 2022, pre-tax Net Tangible Assets (NTA) for the week ending January 19, 2022, has improved by 1.51%. The company mentioned that equities have been volatile in recent weeks due to a sharp rise in yields. Trading on Fat Prophets Global High Conviction Hedge Fund has commenced on January 21, 2022. The company is conducting an Equal Access Buyback program which will open on February 1, 2022, and close on March 01, 2022. In December 2021, FPC reported 3.37% increase in pre-tax NTA (month-on-month basis). It held 38.25% securities in the Australian market.

In the 2021 Annual Report, FPC posted pre-tax NTA growth of 27.74% (YoY) in FY21. It had registered an increase of 29.1% in ordinary profit to reach $9,977 million over the previous year. It had distributed 7.5 cents per share FY21 full-year dividends.

Technical Analysis: On the weekly chart, FPC stock price broke the horizontal trendline support and sustained below the trend line levels. Moreover, the prices are trading below the trend-following indicators 21-period SMA and 50-period SMA, which may act as a resistance zone.  However, the momentum oscillator RSI (14-period) is trading at ~35.09 level near an oversold zone. An important support level for the stock is placed at AUD 1.00 while the key resistance level is placed at AUD 1.18.

Considering the rising bond yields, quantitative tightening by the US Federal Reserve, the commencement of Equal Access Buyback program, investing in this stock at such uncertain levels should be taken with a calculated approach, hence a ‘Watch’ stance is suggested. The stock was analyzed as per the closing price of AUD 1.085 per share as of 27^th January 2022.

Daily Technical Chart – FPC

Source: REFINITIV 

Note: Lithium Australia Ltd (Company) is a client of Kalkine Media Pty Ltd (Kalkine Media), an affiliate of Kalkine. However, under no circumstances have Kalkine or its related entities been, directly or indirectly influenced in making any related insights concerning Company as contained in this report, and no form of compensation is or will be received by Kalkine, Kalkine Media or Kalkine’s other related entities for the publication of this report.

Note:  The green color line in the chart depicts shows 21-Period SMA, while the purple color denotes RSI (14-period)

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 for 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 the uptrend may take a pause due to profit booking or selling interest. 

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