Stocks’ Details

Fintech Chain Limited

Decent Growth in Topline and Bottom Line: Fintech Chain Limited (ASX: FTC) is engaged in the provisioning of online and offline transaction authentications. The market capitalisation of the company stood at ~$65.07 million as on 7^th January 2021. For the half-year ended 30^th September 2020 (1H FY21), the company reported a rise in revenue to RMB 25.0 million from RMB17.8 million in 1H FY20. In addition, FTC also generated an income of RMB 8.9 million and RMB 12.0 million from the provisioning of information technology services and the sale of point-of-sale machines and hardware, respectively. Profit after tax for the period amounted to RMB 3.1 million, reflecting a rise of 250.6% over 1H FY20. This was mainly supported by the rise of RMB 1.7 million in gross profit and the fall of RMB 0.4 million in selling expenses. 

Key Financials (Source: Company Reports)

Outlook: For FY21, the company anticipates revenue from T-linx^TM to grow in spite of current economic recessionary conditions. In addition, FTC is focused on increasing its overall banking market share in Greater China and overseas.

Stock Recommendation: The company closed 1H FY21 with cash and cash equivalents of RMB 1,793,061 as compared to RMB 2,848,798 in 1H FY20. In the last nine months, the stock of FTC has moved up by 64.17%. As a result, the stock is trading towards its 52-week high of $0.130. On TTM basis, the stock is trading at a P/E multiple of 37.6x as compared to the industry median (Financials) of 18.1x. FTC has an EV/sales multiple of 7.8x against the industry median (Financials) of 1.9x on TTM basis. On a technical analysis front, the stock has a support level of ~$0.067 and a resistance level of ~$0.12. Considering the price movement in the past few months, higher valuation, and current trading level, we suggest investors to book profit and give a “Sell” rating on the stock at the current market price of $0.100 per share on 7^th January 2021.

Cobalt Blue Holdings Limited

Progress on Pilot Plant: Cobalt Blue Holdings Limited (ASX: COB) is involved in the exploration and development of cobalt. The market capitalisation of the company stood at ~$51.07 million as on 7^th January 2021. Recently, the company notified the market with an update in relation to progress on the pilot plant, wherein, it stated that the major items of equipment have arrived at Broken Hill plant site and the remaining items are expected to come in January 2021. The company has aimed the first production in late February 2021 from the plant. During the quarter ended 30^th September 2020, the company witnessed a growth of 55% in ore reserves to 71.8 Mt at Broken Hill Cobalt Project. Ore Reserve comprised of the growth of 34% in cobalt to 51,000 tonnes. Net cash used in the operating activities stood at $510k and 430k from investing activities. During FY20, the company reported net loss of $2,384,000 against $2,909,000 in FY19. This improvement was mainly due to lower employee benefits expenses of $92,000, lower legal and professional costs of $201,000 and lower corporate costs of $186,000.

Cash Flow (Source: Company Reports)

Outlook: The near-term focus of the company revolves around producing a battery ready cobalt product. In addition, the company is optimistic about the demand for the battery market.

Stock Recommendation: During September 2020 quarter, the company raised $3.75 million before costs through placement of 39,485,275 fully paid ordinary shares at $0.095 per share to institutional and professional investors. The company closed the quarter with cash and cash equivalents of ~$8.1 million. In the last three and six months, the stock of COB has moved up by 139.13% and 120%, respectively. As a result, the stock is trading towards its 52-week high of $0.245.  In addition, we have considered 14-day RSI, and it was observed that the stock is currently in the overbought zone and may witness some correction, going forward. On a technical analysis front, the stock has a support level of ~$0.106 and a resistance level of ~$0.245. Hence, considering the returns on stocks, RSI levels, and current trading levels, we advise investors to book profit and give a “Sell” rating on the stock at the current market price of $0.220 per share, up by 4.761% on 7^th January 2021.

Australian Vanadium Limited

Signing of MOU with U.S. Vanadium LLC: Australian Vanadium Limited (ASX: AVL) is engaged in the exploration of vanadium, copper & gold, uranium. The market capitalisation of the company stood at ~$46.88 million as on 7^th January 2021. Recently, the company announced that it has engaged CADDS Group to undertake local design and consultancy for its 5kW/30kWh residential VRFB through its VRFB subsidiary, VSUN Energy. In the month of September 2020, the company has inked an MOU with Chinese VRFB manufacturer CEC VRFB Co. Ltd (CEC) for product development of CEC’s residential VRFB for the Australian market.  During Q1 FY21, the company managed to return to normal operations after the disruption of lockdowns considering the initial COVID-19 global responses. In addition, the company finished the placement of $5 million. The net cash outflow from operating and investing activities stood at $509k and $756k, respectively.

Cash Flow (Source: Company Reports)

Outlook: Looking forward, the company would continue to pursue other potential investment opportunities to enhance shareholder value.

Stock Recommendation: As on 30^th September 2020, the cash balance of the company stood at $8.96 million. The stock of AVL has surged 45.45% and 100% in the last six and nine months, respectively. Currently, the stock is trading towards its 52-week high of $0.018. In addition, we have considered 14-day RSI, and it was observed that the stock is currently in the overbought zone and may witness some correction, going forward. On a technical analysis front, the stock has a support level of ~$0.01 and a resistance level of ~$0.018. Hence, considering the returns on stock, RSI levels, and current trading level, we advise investors to book profit and give a “Sell” rating on the stock at the current market price of $0.015 per share, down by 6.251% on 7^th January 2021.

Comparative Price Chart (Source: Refinitiv, Thomson Reuters)

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