YANCOAL AUSTRALIA LIMITED (ASX: YAL)

YAL is involved in the production of coals in the global seaborne market, having six coal mines in Australia. It holds a diversified portfolio of assets including both large-scale open cut and underground mines. The company was founded in 2004 and is based in Sydney, Australia. The current market capitalization as of 15^th September 2021 is $3.31 billion, at a stock price of $2.58 per share.

Financial & Operational Updates – As per the first half financial result 2021 announcement on 19^th August 2021, the revenue declined by 10% Y-o-Y, to $1.78 billion in 1HFY21 as compared to $1.97 billion in 1HFY20, due to low volume of coal sales. Net Loss was reported at $129 million in 1HFY21 as compared to Net Profit of $605 million in 1HFY20. The cash balances stood at $539 million at the end of 1HFY21, with no interim dividend to its shareholders for the same period. Further, the operating cash cost for 1HFY21 was $66/tonne.

Technical Analysis: The stock was in a downtrend till it bounced from the lows of ~$2.060 and made a recent high of ~$2.615. Prices have also broken an important resistance level of $~2.600 level during the upside movement and now hovering around the breakout level, indicating the possibility of a further uptrend. On the daily chart, the RSI (14-period) is in positive territory at ~66.48 levels. The 21-days simple moving average (SMA) is sustaining below the CMP and supporting the positive stance. The important support levels for the stock are at $2.200 followed by $1.980, whereas the resistance levels are $2.900 followed by $3.200.

Despite the decline in revenues and net loss in 1HFY21 over net profit in 1HFY20, the stock continued its upward rally, defying all rational of the financials and losses on the books. Considering the above facts, 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 as per the closing price of $2.58, up by ~2.788%, on 15th September 2021. However, the risk levels are extremely high in view of the weak fundamentals.

Daily Technical Chart – YAL

Source: REFINITIV 

RESAPP HEALTH LIMITED (ASX: RAP)

RAP is a digital platform-based healthcare service provider. With the use of machine learning algorithms, it uses the sound of patients to diagnose and manage respiratory diseases. The company was founded in 2000 and is based in Brisbane, Australia. The current market capitalization as of 15^th September 2021 is $70.45 million at a stock price of $0.08 per share.

Financial & Operational Updates – As per the announcement on 1^st September 2021, RAP received regulatory approval in Indonesia for its respiratory disease diagnostic test ResAppDx. On 14^th September 2021, it got approved for Advanced & Overseas R&D Finding from AUS government, which covers FY21, FY22, & FY23. The revenue for FY21 is reported at $69.73 and net loss reported at $6.77 million, down 20% YoY. Cash balance at the end of FY21 is stated at $6.59 million as compared to $5.78 million at the end of FY20.

Technical Analysis: The RAP price witnessed a robust rally from the low of AUD 0.042 to a high of AUD 0.102 tested on 14 September 2021. Currently, prices are facing resistance of the horizontal trendline at AUD 0.098 and prices are sustaining below the trend line resistance level. Moreover, the momentum oscillator RSI (14-period) is trading in an overbought zone at (~71.82 level), which indicates the possibility of a downside correction from the higher levels. However, the prices are trading above the trend-following indicators 21-period SMA, which may act as a crucial support level for the prices. An immediate resistance level for the stock, is placed at AUD 0.098 while the key support level is placed at AUD 0.065.

The company is generating revenue and widening its wings in global market, however reporting net losses. On technical front, considering the support & resistance and the RSI, investing in this stock at such elevated prices reduces the margin of safety, hence it's suggested to ‘Watch’ till the prices approach the support levels and the company shows improvement in its bottom line. The stock was analysed as per the closing price of $0.08, down by ~2.44%, on 15^th September 2021.

Daily Technical Chart – RAP

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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