Harris Technology Group Limited (ASX: HT8)

HT8 is an Australian-based online retailing company offering a wide range of information technology/consumer electronics (IT/CE) products for small and medium businesses in Australia. The Company’s main business is the e-Commerce business of Harris Technology (HT). Its business is conducted online both on www.ht.com.au and through other online platforms such as Amazon (www.Amazon.com), eBay (www.eBay.com), Kogan (www.Kogan.com) and Catch (www.Catch.com). The current market capitalization is $40.20 million, and the current price is $0.140 per share.

Financial & Operational Updates – as per the exchange announcement of 2^7th August 2021, the company announced its financial results for the FY21, stating a significant increase in revenue by 206% to $41.8 million as compared to the revenues of $13.6 million in FY20. The company worked on its assets base which came as the Net Assets of $7.66 million in FY21, a complete turnaround from the Net Liabilities of $3.9 million in FY20. The company de-levered its books from the debt of $5.83 million in FY20 to the current debt of $2.44 million in FY21. At micro-level analysis: the 4Q FY21 ending on 30^th June 21 reported an increase in revenue of 90% to $12.56 million from $6.59 million on prior comparison period YoY.

On the operational front, the company attained the Number 1 marketplace seller on Amazon Australia in July 2020. Also, the company gained significant growth on eBay Australia with $1 million of monthly sales in June 2021, which is record-breaking on its own.

Technical Analysis: The stock was in a downtrend till it touched the lifetime lows around $0.010 and then tried reversing all losses and moving gradually upside. The relative strength index is at 72.782, which is an overbought territory, implying some short-term correction anytime soon. The 21 days simple moving average is hovering close to the stock price and placed below $0.115, indicating a more bearish trend left for the prices from these levels. The stock has declined steeply since Jan’2021 levels and is currently in a low volatile zone, hence the support is placed near the current prices around $0.10 and similarly the resistance is placed at $0.155 levels. Breaking either side of the mentioned levels can give a clear direction for the prices to follow.

Investors can consider exiting from the stock if the Resistance levels mentioned as per the technical analysis have been achieved and subject to the factors discussed above.

Though the revenues have increased, profits and cash flows have improved, but the stock prices have failed to reflect the improved financials. On the technical aspect, the stock can be analysed around the support and resistance levels, to take any investment actions. Considering the above facts, investors with high- risk appetite might consider a ‘Speculative Buy’ position at the closing price of $0.140, up by ~3.703%, as of 8th September 2021. However, the risk levels are extremely high in view of the technical support levels.

Daily Technical Chart – HT8

Source: REFINITIV

Trek Metals Limited (ASX: TKM)

TKM is engaged in the exploration and development of mineral properties in Africa and Australia. The company explores for zinc, lead, and gold deposits. Its key projects is the Pincunah and Jimblebar gold and base metal projects located in the Pilbara region. The company was incorporated in 2007 and is based in North Fremantle, Australia. The current market capitalization is $23.82 million, and the current price is $0.10 per share.

Financial & Operational Highlights – On 2^nd August 2021, the company announced positive updates on its Tambourah Project, stating the rock chip samples return exceptional grades of gold mineralization in that area. As per the announcement on 29^th July 2021, the company shared a positive update on the Pincunah project, the maiden drilling program confirms the large scale of VMS copper-zinc mineralization across that area. Off late the company announced its quarterly activities report for the quarter ending June 2021, stating there were no cash receipts from the customers for the period ending on 30^th June 2021. The lack of cash receipts put a drain on the cash balances, reducing its cash balance to $4.04 million in June 2021 as compared to the $4.72 million on 31^st March 2021.

Technical Analysis- The stock was in a downtrend till it bounced from the lows of $0.011 and moving gradually, making spikes at various instances adding volatility to the stock. The relative strength index is at 64.706 which is heading towards an overbought zone and can witness correction any time soon the more it encroaches towards the upper end of the range. The 21 days simple moving average is placed below the stock price of $0.079, implying a more bullish trend to the stock prices, considering the lagging behaviour of the Moving Averaging.  Since the prices have spiked lately, the support is coming in a range between $0.075 and $0.065. The resistance for the stock is coming around $0.11 and the next level is plotted at $0.15.

Missing cash receipts from its customers, volatile commodity prices and highly volatile stock prices, devoid the rationale of investing at these levels. Unless the financial improves and the prices approach the support levels, it is suggested to ‘Wait’ as per the risk and reward ratio at the closing price of $0.10, up by ~9.89%, as of 8^th September 2021.

Daily Technical Chart – TKM

Source: REFINITIV

Link Administration Holdings Limited (ASX: LNK)

LNK is an Australian based company providing technology-enabled administration solutions for companies, large asset owners, and trustees worldwide. The company operates through Retirement & Superannuation Solutions (RSS); Corporate Markets (CM); Banking & Credit Management (BCM); and Fund Solutions (FS) segments. The RSS segment provides core member and employer administration services; and a range of value-added services, including integrated clearinghouse, financial planning and advice, direct investment options, and trustee services. The company was incorporated in 2005 and is based in Sydney, Australia. The current market capitalization is $2.46 billion, and the current price is $4.60 per share.

Financial & Operational Highlights – The company recently released its results for the financial year ending on 26^th August FY21, stating the marginal decline in revenues to $1.16 billion in FY21 as compared to $1.23 billion in FY20. The decline in revenues, impacted the operating EBIT, pulling it down to $141 million in FY21 from the $180 million in FY20. The company delivered its books by bringing down its debt to $455 million in FY21 from the debts of $750 million in FY20. To cheer its shareholders, the company paid a total dividend of 10 cents per share in FY21. The losses from the ordinary activities after tax increased by 59% to $162.7 million in FY21 as compared to the losses of $102.52 million in FY22.

On the operational front, the company aligned its strategy to the Paris Agreement and 4 out of 17 UN Sustainable Development goals. The operating costs were reduced by 4%, which saved $32.9 million and further the benefits from Global Transformation are expected in FY22.

 Technical Analysis- The stock is in an overall downtrend forming lower high and lower lows and eventually bounced from the lows of $2.64 levels in March 2020. The relative strength index is at 42.124, which is between an overbought and oversold range, pointing at the directionless movement of the stock prices from current levels. The 21 days simple moving average is hovering closer to the stock price and placed above at $4.810, which implies a further bearish trend from current levels. Since the prices are declining and now in a low volatile band, the support levels are placed at $4.05. For the stock to regain the upwards movement, the resistance of $5.35 should be breached with strong volumes.

Declining revenues and accumulating losses along with the gradual declining stock prices warrants a turnaround in the financials which should be reflected in the stock prices. Till then it is prudent for investors to ‘Watch’ for any action around the support and resistance levels at the closing price of $4.60, as of 8^th September 2021.

Daily Technical Chart – LNK

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 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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