Zip Co Ltd (ASX: Z1P)

Incorporated in 2009, is an Australian BNPL (Buy Now Pay Later) provider offering credit wallet, including the Pocketbook operations through ZIP AU, Zip Global and Spotcap in Australia and globally. Its market capitalization stood at AUD 4.05 billion as of 20th October 2021, at the stock price of AUD 7.12 per share.

Financial and Operational Updates: As announced on 19^th October 2021, a total of 216,256 number of ordinary shares will be removed from voluntary escrow account on 26^th October 2021. As per the First Quarter FY22 Updates released on 18^th October 2021, Quarterly Revenue was up by ~89% Y-o-Y and ~8% up Q-o-Q and reported as AUD 132.8 million for 1QFY22. Number of customers and merchants also increased by ~82% and ~71% Y-o-Y, reaching 8.0 million and 55.2k, respectively. The transaction value increased by ~101% Y-o-Y to reach ~AUD 1.9 billion in1QFY22. Z1P successfully completed its global rebrand in six countries and in the US changing from Quadpay to Zip in mid-October 2021. New merchants in the US market like Glam Seamless, Mercari, Revolve, Emma Mattress, Polaris Industries Image Skincare and Shein are likely to be added to the platform. Zip US is expected to cold launch its physical card program and Microsoft Edge is also likely to execute Zip’s proprietary instalment technology in 2QFY22. On 4^th October 2021, Bank of America Corporation and its related bodies corporate changed its substantial shareholding from ~7.45% to ~6.45%.

Technical Analysis: On the daily chart, Z1P price levels have consolidating in the range between AUD 6.32 and AUD 7.05. However, prices have recently managed to break its sideways movement and also able to sustain above its both the trend-following indicators 21-period SMA and 50-period SMA in the daily chart. The leading indicator RSI (14-period) also moved upwards from its lower levels and currently trading at ~55.79 level indicating bullish momentum for the stock. The crucial support and resistance levels are AUD 6.48 and AUD 8.06, respectively.

Z1P financial performance as stated in 1QFY22 results gives a positive stance for future, along with its current price levels. Investors with a high-risk appetite can consider it for a ‘Speculative Buy’ position, keeping the support and resistance levels as crucial points. The stock was analysed as per the closing price of AUD 7.12 per share, up by ~0.281%, as of 20^th October 2021. However, the risk levels are high depending on its upcoming quarters’ results and synergies from new and existing alliances.

Daily Technical Chart – Z1P

Source: REFINITIV

Pure Hydrogen Corporation Ltd (ASX: PH2)

PH2 is an Australia based company focussing on the development of Hydrogen and Fuel Cell Technology, also working on conversion of methane to hydrogen and carbon (graphene) – zero emissions. Currently operational in Australia, it plans to supply to Asia Pacific – mainly to Japan and Korea. Its market capitalization as of 20^th October 2021 stood at AUD 102.00 million and the share price stood at AUD 0.29 per share.

Financial and Operational Updates: As per the release of Financial Report for FY21 on 30^th September 2021, showed a decrease in Revenue from continuing operations and reported as ~AUD 4k for FY21 as against ~AUD 9k in FY20. Its Net Loss after Income Tax for the FY21 increased from ~AUD 1.52 million in FY20 to ~AUD 2.78 million in FY21. Cash at the end of FY21 was reported as ~AUD 10.10 million as of 30^th June 2021 versus ~AUD 0.85 million in PcP. As announced on 29^th September 2021, a total of 5,000,000 number of ordinary fully paid shares will be removed from voluntary escrow account on 8^th October 2021. As per the announcement on 16^th September 2021, the company confirm encouraging gas flows from Venus-1 Pilot study. It has Contingent Gas Resources 2C of 130PJ and Prospective Gas Resources of 536PJ. PH2 holds commercial talks with customers for hydrogen supply.

Technical Analysis: On the weekly chart, PH2 stock price witnessed a breakout of the horizontal trendline resistance at AUD 0.27 level and sustaining above the same. Moreover, the prices are trading above the trend-following indicators 21-period SMA and 50-period SMA, indicating positive momentum. However, the momentum oscillator RSI (14-period) is trading at ~63.36 levels. An important support level for the stock, is placed at AUD 0.27 while the key resistance level is placed at AUD 0.31.

As outlined above its non-satisfactory financial results, its current price levels seem to be on higher side. The risk attached in investing in the scrip at this level should be taken in consideration with a cautious approach, hence a ‘Watch’ stance is suggested. The stock was analysed as per the closing price of AUD 0.290 per share, down by ~10.770%, as of 20^th October 2021.

Weekly Technical Chart – PH2

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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