PointsBet Holdings Limited (ASX: PBH)

PBH offers sports and racing products through a cloud-based wagering platform. Incorporated in 2017, its market capitalization stood at AUD 1.98 billion as of 10^th December 2021.

Financial & Operational Updates – In the month of December 2021, HG Vora Special Opp. Master Fund Ltd. and others have changed their substantial shareholding from ~7.03% to ~10.45%. On 24^th November 2021, it got a Sports Betting Supplier License in Virginia. As per 9^th November 2021, New York State Gaming Commission (NYSGC) provided a Platform Provider License to PBH. As per its quarterly updates, Cash Active Clients in Australia increased by ~79% -Y-o-Y while ~367% growth in USA in 1QFY22. It Gross and Net Win were also up by ~45% and 56% respectively, with Gross and Net Win Margins as ~13.9% and ~8.7% in 1QFY22. Its sales receipts for 1QFY22 were reported as AUD 72.39 million and closed the quarter with a cash balance of ~AUD 669.17 million at the end of 30^th September 2021 versus ~AUD 276.16 million at the end of 30^th June 2021.

Technical Analysis: After hitting 52-week low at AUD 6.63 tested on 6th December 2021, PBH’s prices have started reversing from key support of the downward sloping trend line and have closed its week above its 21-period SMA. On the daily chart, the RSI (14-period) has recovered from oversold levels and is placed at ~42.50, giving it a positive stance. Prices also made a bullish engulfing candlestick pattern on a weekly chart that also support our bullish stance. Immediate support level is AUD 6.63 while resistance level is AUD 9.00.

Valuation Methodology: P/S Multiple Based Relative Valuation (Illustrative)

*% 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: PBH has provided ~44.10% of return in past nine months and is trading lower the average 52-week price level band of AUD 6.630 and AUD 17.598. The stock has been valued using P/S multiple based illustrative relative valuation method and arrived at a target price with an upside of low double-digit (in % terms). For the purpose of valuation, peers like Betmakers Technology Group Ltd. (ASX: BET), Aristocrat Leisure Ltd (ASX: ALL), Jumbo Interactive Ltd (ASX: JIN), and others have been considered. The company can trade at a slight premium to its peers, considering its increase in cash active clients and 1QFY22 performance. After considering its updates on Quarterly Results, upside potential as indicated by the valuation, the investors with a high-risk appetite can consider it as a ‘Speculative Buy’ along with incorporating the support and resistance as one of the tools while analysing the investment opportunity. The stock was analysed as per the current price of AUD 7.430 per share, as of 10^th December 2021, 10:30 AM (GMT+10), Sydney, Eastern Australia. However, the risk levels are extremely high in view of the future results.

Daily Technical Chart – PBH

Source: REFINITIV

Arizona Lithium Limited (ASX: AZL)

AZL was incorporated in 1969, which is involved in mineral exploration and development mainly in Gold, Copper and Lithium. The projects include Lone Pine Gold Project, Big Sandy Lithium Project, Western Desert Gold / Copper Project, and Lordsburg Lithium Project, located in USA. Its market capitalization stood at AUD 171.02 million as of 10^th December 2021.

Financial and Operational Updates: On 24^th November 2021, AZL reported testwork results from the Big Sandy Lithium project. It witnessed a significant reduction in acid consumption and had seen major advancement in upgrading treatable material. Also, 87% lithium was found from the metallurgical testing program at Hazen Research. On 23^rd November 2021, it got a clean notice from Supreme Government Western Australia and resumed trading from 24^th November (placed on halt since 18^th November 2021).

On 8^th November 2021, after commencement of exploration, it had doubled the project footprint by 96 BLM claims to 192 claims at Lordsburg Lithium Project. Its Titan magneto telluric electromagnetics is scheduled for 1QFY22. On 1^st November 2021, AZL raised AUD 13 million. As per its quarterly report on 29^th October 2021, its sales receipts for 1QFY22 were nil and closed the quarter with a cash balance of ~AUD 4.99 million at the end of 30^th September 2021 versus ~AUD 4.95 million at the end of 30^th June 2021.

Technical Analysis: After hitting 52-week high at AUD 0.155 on 3^rd November 2021, the stock went into consolidation. On a daily chart, currently it is taking support of 50-period SMA and has risen from lower end of horizontal trendline, indicating a positive stance. The momentum oscillator RSI (14-period) is trading at ~51.130 level. An important support level for the stock is placed at AUD 0.077 while the key resistance level is placed at AUD 0.102.

With a view of key findings in the Big Sandy Lithium Project and technical levels, the 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 price of AUD 0.086, as of 10th December 2021, 10:30 AM (GMT+10), Sydney, Eastern Australia. However, the risk levels are extremely high in view of the future findings and saleability.

Daily Technical Chart – AZL

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 Yellow colour line represents the Trendline.

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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