Datmstra Holdings Limited (ASX: DTC)

Incorporated in 2014, DTC provides workforce management solutions by developing, selling and implementing integrated hardware and software-as-a-service (SaaS) solutions in various industries like mining, construction, manufacturing, energy and utilities, government, retail, health and education. Its market capitalization stood at AUD 138.17 million as of 3^rd November 2021.

Financial & Operational Updates – On 3^rd November 2021, its acquisition of TIKS Solutions got completed. As per the Quarterly Report for Q1FY22 published on 28^th October 2021, its revenue was up by ~20% Y-o-Y and reported as ~AUD 6.2 million in 1QFY22, along with increasing Gross Margin from ~74% in 4QFY21 to ~77% in 1QFY22. Its Annual Recuring Revenue (ARR) increased by ~55% Y-o-Y on Pcp and reported as ~AUD 29.3 million (AUD 32.3 million including TIKS) in 1QFY22 but decreased from ~AUD 34.5 million in 4QFY21. The reason behind the decrease in ARR is Newmont descoping. The total users increased to ~746k in 1QFY22 from ~737k Q-o-Q in 4QFY22. The company’s cash and cash equivalents reported as ~AUD 6.65 million as of 30^th September 2021 (1QFY22) versus ~AUD 9.83 million as of 30^th June 2021 (4QFY21).

Technical Analysis: DTC stock prices fall significantly and made a fresh new 52-week low today. Stock is now getting support of the downward sloping trend line. Prices are also getting support of the 138.6% golden Fibonacci extension ratio that further suggesting bullishness in prices. There is also positive RSI divergence with price that might further support the prices in the coming weeks. RSI (14-period) is hovering near to the oversold region at ~33.417 level that indicates prices might reverse from lower levels. Immediate support levels are AUD 0.53 and AUD 0.50 while immediate resistance levels are AUD 0.81 and AUD 0.880.

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

Source: Analysis by Kalkine Group

*% Premium/(Discount) is based on our assessment of the company’s NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

Stock Recommendation: The stock of DTC is trading at its 52-week low level of AUD 0.645, offering a decent opportunity for accumulation. The stock of DTC has been corrected by ~24.29% and ~37.67% in the past one and three months, respectively. The stock has been valued using EV/Sales multiple-based illustrative relative valuation and arrived at a target price of lower double-digit upside (in % terms). The company can trade at a slight discount to its peers’ average EV/Sales multiple, considering its negative operating margin and negative ROE. For the purpose of valuation, peers such as Adacel Technologies Ltd (ASX: ADA), Integrated Research Ltd (ASX: IRI), Iress Ltd (ASX: IRE), and others have been considered.

With an increase in revenue and its gross margin in 1QFY22, the company is indicating a growing future. On the technical front, considering the positive divergence in RSI and trading at lower price range, investors with a high-risk appetite might consider a ‘Speculative Buy’ position, incorporating the support and resistance as one of the tools while analysing the investment opportunity. The stock was analysed as per the current market price of AUD 0.645, 3:00 PM (GMT+10), Sydney, Eastern Australia, as of 3^rd November 2021. However, the risk levels are extremely high in view of the gap between the expected and actual synergies of TIKS Solutions.

Weekly Technical Chart – DTC

Source: REFINITIV 

Novonix Limited (ASX: NVX)

Incorporated in 2012, NVX is an Australian company involved in battery materials and technology focussing on segments like Graphite Exploration and Mining, Battery Technology, and Battery Materials. Its market capitalization stood at AUD 3.86 billion as of 3^rd November 2021.

Financial & Operational Updates – As per the quarterly updates for the period ending 1QFY22 (September) released on 29^th October 2021, equipment for the proposed capable demonstration line (10 tonne per annum) to be installed in new BTS facility in 2022 were ordered. It had received CAD 1.675 million grant from Canadian federally funded non-profit organisation. The Cash Receipts were down and reported as ~AUD 1.66 million for 1QFY22 versus ~AUD 2.02 million for 4QFY21. Cash on hand at the end of 30^th September 1QFY22 was reported as ~AUD 290.97 million versus ~AUD 131.38 million during the preceding quarter period. On 20^th October 2021, Mr. Zhanna Golodryga was appointed as its Boards of Directors. On 5^th October 2021, Gregory Alexander John Baynton and Allegro Capital Nominees Pty Ltd changed its substantial shareholding from 7.2% to 5.2% and on 30^th September 2021, Phillips 66 Company retained 16.16% stake. As per the recent Annual Report for FY21, NVX posted a net loss of ~AUD 18.07 million.

Technical Analysis: Technical Analysis: On the weekly chart, NVX prices are trading above the horizontal trendline and made a 52-week high at AUD 8.39 on November 03, 2021. The momentum oscillator RSI (14-period) is trading in an overbought zone at ~76.913 level and forming a negative divergence with the price action, which indicates the possibility of a downside correction. However, prices are trading above the trend-following indicators 21-period SMA and 50-period SMA, which may act as support levels. The crucial support and resistance levels are AUD 7.40 and AUD 9.00, respectively.

Considering its prices trading at higher levels and RSI in an overbought zone, getting the scrip at this time might burn the investors’ pockets, therefore A ‘Watch’ stance is suggested. The stock was analysed as per the closing price of AUD 8.39 per share, up by ~4.744%, as of 3^rd November 2021.

Weekly Technical Chart – NVX

Source: REFINITIV

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. 

The Green colour line reflects the 21-period moving average. SMA helps to identify existing price trend. If the prices are trading above the 21-period, then it shows prices are currently trading in a bullish trend, (Vice – Versa).

The Blue colour line reflects the 50-period moving average. SMA helps to identify existing price trend. If the prices are trading above the 50-period, then it shows prices are currently trading in a bullish trend, (Vice – Versa).

The Purple colour line in the chart’s lower segment reflects the Relative Strength Index (14-Period) which indicates price momentum and signals momentum in trend. A reading of 70 or above suggests overbought status while a reading of 30 or below suggests an oversold status.

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