VIP Gloves Limited (ASX: VIP)

VIP is a Malaysia-based business engaged in the manufacturing of Nitrile globes. VIP’s subsidiaries include KLE Products Sdn Bhd and VIP Globe Sdn Bhd. The company’s nitrile globes are used in an array of industries, for instance, healthcare & medical, electronics, food & beverages, and manufacturing industries.

Q2FY22 Key Updates –VIP’s production level returned to total capacity by November 2021, full post compliance with COVID-19 protocols. Total nitrile globe production stood at 81 million pieces, representing a sequential increase of 65%. Production levels were curtained in December 2021 due to the 60% workforce constraint implemented by the Malaysian government. Following the Movement Control Order implementation, VIP clocked RM9.1 million (~A$3.0 million). Total gloves sold stood at 96.5 million pieces, up by 86% sequentially. Despite the short-term decline in Average Selling Price (ASP), demand for nitrile gloves has stabilised, and the Malaysian Rubber Gloves Manufacturers Association (MARGMA) estimates the industry to attain an annual growth of 12% - 15% (post-pandemic).

Technical Analysis: On the daily chart, VIP prices are sustaining below the downward sloping trend line and facing the same resistance. Moreover, the momentum oscillator RSI (14-period) is trading at ~32.25, showing that stock is in an oversold zone and bullish divergence may trigger buying at current levels. However, the prices are trading below the trend-following indicators 21-period and 50- period SMA, which may be a resistance level for the stock. A critical support level is placed at AUD 0.016, while the key resistance level is placed at AUD 0.040.

Considering the company’s current price levels with indecisiveness, investing in this stock at such uncertain levels should be taken with a calculated approach; hence a ‘Watch’ stance is suggested. The stock was analysed as per the closing price of AUD 0.028 per share on 02^nd February 2022.

Daily Technical Chart – VIP

Source: REFINITIV 

ASX Stock under Investors Radar – PAA

PharmAust Limited (ASX: PAA)

PAA is an Australian-based clinical-stage pharma company. The company is developing therapeutics for neurodegenerative diseases, cancer, and viral infections. The company’s monepantel (MPL) has completed the Phase I clinical trials in dogs and humans diagnosed with solid tumours.

Operational Updates – Following updates from PAA’s manufacturing partners, the company is on schedule to meet the clinical trial deadlines on the first patient, yet to be recruited for the Phase I/II human trial for motor neurone disease (MND) by May 2022. MPL manufacturing is on schedule and is expected to be complete by mid-February 2022. Throughout the manufacturing and development processes, PAA has targeted to develop a high purity specification, suitable for both veterinary purposes and humans.

Q2FY22 Financial Update: For the three months ended 31st December 2021, PAA clocked a cash position of $2.64 million. Payments for R&D touched $0.313 million. Cash outflow for the quarter stood at $0.656 million, primarily attributed to high staff costs ($0.589 million) and high product manufacturing and operating costs ($0.514 million). Receipts from customers for Q2FY22 stood at $0.922 million.

Technical Analysis: 

On the daily chart, PAA prices sustain above the horizontal trend line support zone and take the same support. Moreover, the momentum oscillator RSI (14-period) trading at ~47.17, reversing from the lower levels. However, the prices are trading below the trend-following indicators 50- period SMA, which may be a resistance level for the stock. A critical support level is placed at AUD 0.08, while the key resistance level is placed at AUD 0.13.

Considering the company’s current price levels with indecisiveness, investing in this stock at such uncertain levels should be taken with a calculated approach; hence a ‘Watch’ stance is suggested. The stock was analysed as per the closing price of AUD 0.0100 per share on 02^nd February 2022.

Daily Technical Chart – PAA

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 previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and is 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 the stock prices tend to find resistance when they are rising, and the uptrend may pause due to profit booking or selling interest. 

The Green colour line reflects the 50-period moving average. SMA helps to identify existing price trends. If the prices are trading above the 50-period, prices are currently in a bullish trend (Vice – Versa).

The Blue colour line reflects the 21-period moving average. SMA helps to identify existing price trends. If the prices are trading above the 21-period, prices are currently 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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