Rent.com.au Limited (ASX: RNT)

RNT operates as a real estate management service such as property listings, handling enquiries from agents, rental payment, etc. Its offerings include RentBond, RentConnect, RentCheck, and RentPay. RNT holds a market capitalisation of $24.65 million as of March 31, 2022.

Financial and Operational Updates: As announced on February 28, 2022, RNT issued about 411.7k shares to key management personnel and 87.56k towards performance rights. The company has been processing over $1 million rental payments a week. It had launched agents’ rent rolls services – Rental Management Australia in February 2022. RNT clocked 10.1% growth in H1FY22 revenue to $1.64 million.

RNT’s ‘Search’ business continue to post positive EBITDA. But at group level, RNT reported negative EBITDA of $819k as compared to -$284k in H1FY21. This was due to RentPay platform wherein which the company is yet to reach scalability to offset rising costs.

Onboarding rent rolls, increased marketing activities towards RentPay and Rent.com.au are the strategic priorities for FY22. 

Technical Analysis: On the daily chart, RNT price witnessed a breakout of a downward sloping trendline at USD 0.051 level (on March 24, 2022). Since the breakout, prices are sustaining above the falling trendline, which indicates bulls are in action. Moreover, the prices are trading above the trend-following indicator 21-period SMA, which may act as a support level. Further, the momentum oscillator RSI (14-period) is trading at ~55.77 level, indicating positive momentum. An important support level for the stock, is placed at AUD 0.048 while the key resistance level is placed at AUD 0.061.

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 RNT has been corrected by ~11.47% in over the past three months. It just recovered from the 52-week low price of $0.042. The stock has been valued using EV/Sales multiple-based illustrative relative valuation and arrived at a target price with an upside of low double-digit (in % terms). The company can trade at a slight premium to its peers, considering the rollout of Rental Management Australia in February 2022. For the purpose of valuation, few peers such as Tian AN Australia Ltd (ASX: TIA), Servcorp Ltd (ASX: SRV), Sunland Group Ltd. (ASX: SDD), and other have been considered. Considering the spurt in H1FY22 revenue, positive EBITDA at its ‘Search’ business, product rollout plans, upside indicated by the valuation, current trading levels, and key risks associated with the business, we recommend a ‘Speculative Buy’ on the stock at the closing market price of $0.054, down by ~3.572%, as on 31 March 2022. Investors with a high-risk appetite can consider entering the stock, however the risk levels are high considering the volatile market risks and business-related risks. Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

RNT Daily Technical Chart, Data Source: REFINITIV 

Karoon Energy Limited (ASX: KAR)

KAR operates as an oil and gas exploration company with investments in hydrocarbons covering Australia, Brazil, and Peru.

Financial and Operational Updates: As announced on March 31, 2022, KAR is looking to acquire a 50% stake in the Atlanta oil field, Santos basin, offshore Brazil. In relation to that, it had inked an agreement with Enauta Energia S.A. in H1FY22, KAR achieved production volume of 2.50 million barrels of oil as compared to 0.82 million barrels in H1FY21. It had clocked revenue of US$186.5 million in contrast to US$23.8 achieved in the prior year. Due to one-time fair value contingent consideration, it had posted a statutory net loss of US$97.7 million in H1FY22 as compared to a net loss of US$1.47 million in the prior year.

Technical Analysis: On the daily chart, KAR prices are trading below the falling trend line resistance zone and facing the resistance of the trendline. Moreover, prices are trading below the trend-following indicator 21-period SMA, which may act as a crucial resistance zone. The momentum oscillator RSI (14-period) is trading at ~49.87 level, indicating negative momentum. An important support level for the stock, is placed at AUD 2.00 while the key resistance level is placed at AUD 2.30.

Considering sizeable losses in H1FY22 and current trading levels, a ‘Watch’ stance is suggested. The stock was analyzed as per the closing price of AUD 2.150 per share, as of 31^st March 2022, up ~0.467%.

Investors can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario.

KAR Daily Technical Chart, Data 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 analysis has been achieved and is subject to the factors discussed above alongside support levels provided.

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.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

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