Weebit Nano Ltd

WBT Details

Completion of Capital Raising: Weebit Nano Ltd (ASX: WBT) operates a data memory technology business to develop and commercialise its ReRAM silicon oxide technology. The market capitalisation of the company stood at $313.54 million as on 3^rd February 2021. In December 2020 quarter, the company extended its strategic partnership with French development partner CEA-Leti to incorporate additional technical development covering ReRAM technology improvements, the embedded memory module, and the selector for the standalone memory market. The company also bolstered its executive team with the appointments of Ilan Sever on the role of Vice President Research & Development and (post quarter- end) Ishai Naveh as Chief Technology Officer.

During the quarter, the company raised $15 million to accelerate growth momentum. This was comprised of $12 million before costs via a strongly supported share Placement to new leading institutional and sophisticated investors and $3 million via a heavily oversubscribed Share Purchase Plan. The net cash outflow from the operating activities stood at $5.3 million. Loss for the year amounted to $4,021,457 against $6,693,803 in FY19.

Cash Flow (Source: Company Reports)

Outlook: In the upcoming six months, the company will be focused on finishing the development of the memory module with enhanced functionality by June 2021. The is expecting significant market opportunities for its next-generation memory technology from the demand for faster and more efficient memory technology.

Stock Recommendation: The company closed December 2020 quarter with cash and cash equivalents of ~$18.8 million. In the past three and six months, the stock of WBT has surged 57.38% and 808.19%, respectively. As a result, the stock is trading above its 52-week low-high average of $2.235. On the technical analysis front, the stock has a support level of ~$1.733 and a resistance level of ~$4.063. Therefore, considering the aforesaid facts, steep price movement in the past months and current trading level, we are of the view that most of the positive factors have been discounted at the current trading level and give an “Expensive” rating on the stock at the current market price of $2.910 per share on 2^nd February 2021. We further suggest investors to wait for a better entry-level.

WBT Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

Smart Parking Limited

SPZ Details

Decent Growth in Q1 FY21: Smart Parking Limited (ASX: SPZ) is mainly engaged in parking management. The market capitalisation of the company stood at $48.49 million as on 3^rd February 2021. Recently, the company has made decent progress on its discussions with Her Majesty’s Revenue and Customs (HMRC) on UK VAT matters related to the administration of Parking Breach Notices. The company added that HMRC has provided a framework for resolving outstanding VAT matters and has advised the Company it is withdrawing a critical previous decision. The framework proposed by HMRC is likely to reach a settlement, which will result in write back to profit in FY21 up to $7.1m of prior year input VAT.  During Q1 FY21, the company experienced a positive return from the initiatives executed in FY20 to streamline & cement the business. In addition, the company added 56 new sites, which was aided by re-structuring of the UK sales team. NZ Services business has been developed with 2 sites, which are currently in the process of installation.

Key Metrics (Source: Company Reports)

Outlook:  During Q2 FY21, the company is committed to add 40 new sites. The company would maintain its focus on expanding the NZ Managed Services offering with more sites in the pipeline.

Valuation Methodology: EV/Sales Multiple Based Relative Valuation (Illustrative)

EV/Sales Multiple Based Relative Valuation (Source: Refinitiv, Thomson Reuters)

Note: All the forecasted figures are taken from Thomson Reuters, NTM: Next Twelve Months

Stock Recommendation: During the quarter, the company recorded positive operating cash flow of $0.6 million. As on 30^th September 2020, the cash balance of the company stood at $9.3 million. In the past one month, the stock has corrected 15.62%. The 52-week low-high range for the stock stands at $0.070 - $0.255, respectively.  We have valued the stock using an EV/Sales multiple based illustrative relative valuation method and arrived at a target price which is offering an upside of low double-digit (in percentage terms). On the technical analysis front, the stock price of SPZ has an immediate support level of ~$0.084 and a resistance level of ~$0.180. Therefore, considering the decent performance in Q1 FY21, the addition of new sites, future focus and key risks associated with the business, we give a “Speculative Buy” recommendation on the stock at the current market price of $0.145 per share, up by 7.407% on 3^rd February 2021.

SPZ Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

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