BrainChip Holdings Ltd

BrainChip Holdings Ltd (ASX: BRN) is a technology company producing neuromorphic processors. The chip has a wide range of capabilities, including on-chip training, learning, and inference. By mimicking brain processing, the company makes a processing architecture called Akida, both scalable and flexible. Akida is focused on ultra-low power and fast AI Edge Network for vision, audio, olfactory and innovative transducer applications.

Financial and Operational Update: On 21 November 2021, the company announced that it entered into a 4-year agreement with MegaChips for Akida IP to advance its technology positioning for next-generation, Edge-based AI solutions. This agreement is expected to bring an upfront license fee and additional payments spread over the agreement term. Also, the company will be eligible to receive a different amount based on engineering efforts, software support fees and royalties associated with MegaChip’s customer engagements.

Under its financial highlights, on 21 October 2021, the company released its quarterly activities report for the period ended 30 September 2021. The cash stood at US$23.9 million at the end of the quarter versus US$17.7 million in the prior quarter. Net operating cash outflows stood at US$4.0 million at the end of the quarter (Q2FY21: net outflows of US$3.1 million). Net investing cash outflows for the quarter stood at US$0.03 million (Q2FY21: US$0.003 million). Cash inflows from financing activities stood at US$10.28 million for the quarter. Also, the company released the first batch of Akida1000 production chips by Socionext.

Technical Analysis

Weekly Price Chart:

Note: The purple color line in the chart depicts RSI (14-period). The sky blue and green color lines show 50-Period SMA and 21-Period SMA respectively.

On the weekly chart, BRN prices are hovering near the horizontal trend line resistance level at AUD 0.78 and continuously facing the resistance of the same. Moreover, the leading indicator RSI (14-period) is trading near an overbought zone at ~68.68 level, which indicate the possibility of a correction in the stock from the higher levels. However, the prices are trading above the trend-following indicators 21-period SMA and 50-period SMA, which may act as a support level. An important for the support levels stock is placed at AUD 0.65 while resistance level is at AUD 0.78.

Stock Recommendation

The company expects to release the Akida production units and boards to its EAP customers in Q4FY21, which will likely increase the topline. Further, the company would focus on building out its sales and marketing organization in preparation for the official commercial launch of the AKD1000 chip. Moreover, the company would continue to invest in the R&D necessary to bring the next generation of Akida products to market for maintaining its competitive advantage. On risk factor, the company’s business could be impacted by the uncertainties arising from the ongoing pandemic. Also, any shift in new technology could affect the way of doing business, and hence, its operational performance could be hampered.

Therefore, considering the facts above and current trading levels, we give a “Watch” recommendation on the stock at the closing market price of A$0.72, up 2.857% as of 17^th December 2021.

Pointerra Limited

Pointerra Limited (ASX: 3DP) is focused on the global commercialisation of 3D technology solutions to strengthen digital asset management activities across sectors, including civil infrastructure, mining, oil & gas, architecture, engineering & construction, and government agencies at all levels. The cloud-based solution is supported with compression, visualisation and analytics algorithms indexing 3D datasets. The company has both granted and provisional Patent Applications in multiple countries and jurisdictions.

Financial and Operational Update: On 14 December 2021, the company announced that it received material contracts from new and existing US energy utility customers. The agreement includes the US energy utility Entergy contract worth US$2.37-US$4.00 million (A$3.29 million to A$5.56 million), US energy utility Pacific Gas & Electric contract for minimum US$0.70 million (A$0.97 million), and US energy utility Gulf Power contract for US$0.05 million (A$0.07 million).

Under its financial highlights, on 29 October 2021, the company released September 2021 quarter activities and cash flow report, where cash receipts from customers stood at A$0.98 million plus an additional A$0.83 million was reported in receivables from Q1 activities. Strategic partnerships and collaborations were made (e.g. AMAG, FiberSense and HyperOne) to expand and accelerate sector opportunities. The company continued to grow the ACV spend by existing customers and added new customers and prospects across Pointerra’s six target sectors and industries. At the end of the quarter, cash equivalents stood at $4.26 million.

Technical Analysis

Weekly Price Chart:

Note: The purple color line in the chart depicts RSI (14-period). The sky blue and green color lines show 50-Period SMA and 21-Period SMA respectively.

On the weekly chart, 3DP prices are sustaining above the falling trend line breakout and taking support of the same. The momentum oscillator RSI (14-period) is trading at ~43.65 level, reversing form the lower level. However, the prices are trading below the trend-following indicator 21-period SMA and 50-period SMA, which may act as a resistance level for the stock. The crucial support level for the stock is placed at AUD 0.34, while the key resistance is at AUD 0.46.

Stock Recommendation

The Company continues to operate a lean, agile, low-cost operating model as it scales customer sales and will continue to add R&D and sales resources in line with growth in the sales pipeline. This approach generated multiple cashflow positive quarters during FY21, and for the full year, Pointerra generated near cashflow breakeven from operating activities. The Company is expected to commercialise its technology stack via a recurring subscription-based revenue model. Pointerra’s vision is to become a globally relevant geospatial technology business focused on solving the numerous challenges of using 3D data to manage the physical world – simplifying the complex and doing it faster than anyone else.

Therefore, considering the facts above and current trading levels, we give a “Speculative Buy” recommendation on the stock at the current market price of A$0.385 as of 17^th December 2021 (Time: 11:52 AM (GMT+10), Sydney, Australia).

Hot Chili Limited

Hot Chili Limited (ASX: HCH) is a copper developer involved in developing the Costa Fuego copper hub on the coastal range of Chile. The company is engaged in exploring and developing the Cortadera copper-gold porphyry discovery. HCH holds three projects that include Cortadera, Productora, and El Fuego.

Financial and Operational Update: The company recently updated that its underwriters and investors have approved the CAD$30 million placement. The proceeds from the placement will mainly support upgrading the Cortadera Resource, accelerating the Costa Fuego Preliminary Feasibility Study (PFS), and undertaking various high-priority exploration targets. The company intends to list its shares on the TSX Venture Exchange and has reserved the symbol "HCH". On 19 November 2021, it confirmed the consolidation of its issued shares and options on a 50 to 1 basis. On the financial front, the company holds cash and cash equivalents of A$12.063 million at the end of the quarter ended 30 September 2021. In the quarterly report ended 30 September 2021, the company updated that it has completed a fruitful capital raising of $40 million.

Technical Analysis

Weekly Price Chart:

Note: The purple color line in the chart depicts RSI (14-period). The sky-blue and green color lines show 50-Period SMA and 21-Period SMA respectively, while orange color line represent the trend line.

HCH prices broke the upward sloping trend line by downside that further indicates bearishness in the stock. Prices are also trading below its 21 and 50-period SMA on a weekly chart that also confirms that the stock is trading in a bearish territory. RSI (14-period) is hovering at ~39.84 level that also indicates that the prices are trading in a bearish momentum. Immediate support levels are AUD 1.580 and AUD 1.264 while immediate resistance levels are AUD 1.950 and AUD 2.520.

Stock Recommendation

The company remains hopeful of adding a presence in North American markets and maintaining its emphasis on delivering Costa Fuego into production on the back of firming copper prices and the limited new large copper mines. Therefore, considering the facts above and the current trading levels, we give a “Watch” recommendation on the stock at the closing market price of A$1.72, down 1.715% as of 17^th December 2021.

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 on 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 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 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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