Empire Energy Group Limited (ASX: EEG)

EEG is an Australian company involved in the acquisition, development, production, exploration, and sale of Oil and Natural Gas in the US. Incorporated in 1981, its market capitalisation stands $194.81 million as of 16^th September 2021.

Financial & Operational Highlights – On 13^th September 2021, the company released its half-yearly results for the period ended 30^th June 2021 where revenues stood at $3.1 million as compared to $3.5 million in 1HFY20. The company reduced its debt to US$6.1 million in 1HFY21 from the debts of US$6.5 million in 1HFY20. The Net Loss increased from $5.76 million in 1HFY20 to a total loss of $6.29 million in 1HFY21. There was a substantial increase in cash balance at the end of 1HFY21, which stood at $41.68 million versus $14.15 million at the end of 1HFY20. On 16^th August 2021, the company announced the acquisition of Pangaea Pty Ltd and EMG Northern Territory Holdings Pty Ltd in Beetaloo’s Sub-basin (Tenements).

Technical Analysis- EEG does not show a major trend and the price was going hand in hand with the 21 days simple moving average line, until surpassing the level of $0.298 in September and gives a breakout. The Relative strength index is at 66.58, which is hovers around the overbought range, which might give a short-term correction as close as it gets near and above the range, but it can’t be taken as the only and conclusive evidence.

Investors can “Sell” the stock if the Resistance levels mentioned as per the technical analysis have been achieved, subject to their risk appetite and other factors discussed above. 

With the marginal declining revenues and a substantial increase in cash balance, the financial health of the company for 1HFY21 seems decent. As per Technical Analysis, the price range has seen a breakout at $3.17 and expects to show an upward journey. After considering all the factors mentioned above, investors with 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 at the price of $0.330, as of 16 September 2021, 4.28 PM (GMT+10), Sydney, Eastern Australia. However, the risk levels are extremely high in the view of the weak fundamentals.

Daily Technical Chart – EEG

Source: REFINITIV

Renascor Resources Limited (ASX: RNU)

RNU is an Australian company involved in the development, exploration, and evaluation of economically feasible deposits having copper, graphite, gold, and other minerals. Incorporated in 2009 in Adelaide, its market capitalization stands of $310.33 million with the current price at $0.155 as of 16^th September 2021.

Recent Updates: As per the announcement on 15^th September 2021, RNU was granted Major Project Status by the Australian Government to the Siviour Project. In August 2021, it completed a pilot trial at the graphite production facility in South Australia. There has been no cash receipt from the customers in 4QFY21 with the cash balance at the end of FY21 stated as $17.3 million. On 17^th May 2021, it was added to the MSCI (Morgan Stanley Capital International) Micro-Cap Australia Index. On 23^rd April, RNU raised capital of $15 million from Institutional Investors of Australia and overseas.

Technical Analysis: The stock gained its momentum from the start of this year 2021 but didn’t sustain for long until yet again it started its up journey from lows in July at $0.66. Since then, it is making new highs every day. The relative strength index is at 65.08, which is near to the overbought territory, it might give a short-term correction if it reaches 80 range of RSI and above. Even though the 21 days simple moving average is placed slightly below the stock price at $0.1242, which might imply a bullish trend, but it is subject to a decent strong resistance level at $0.165.

Amid low cash receipts from customers in the last 12 months, an elevated price level, and risk associated with the business, investing in stock at the current price level is risky. Unless the financial improves and the prices approach the support levels, it is suggested to ‘Watch’ the stock at the closing price of $0.155, down by ~6.061%, as of 16^th September 2021.

Daily Technical Chart – RNU

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 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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