Hexagon Energy Materials Limited (ASX: HXG)

Found in 2001, HXG is an exploration company with projects in energy materials, resources, and clean energy. Its projects include Western Australian assets, Halls Creek Gold Project, and McIntosh Graphite Project. Its market capitalization stood at AUD 40.58 million as of 22^nd November 2021.

Financial and Operational Updates: On 11^th November 2021, a new anomaly of Ni-Cu-PGE was identified at Melon Patch from the recent Induced Polarisation (IP) geophysical survey. HXG entered in an earn-in proposal with South Star Metals Corp., wherein the latter gives a right of acquiring 75% interest in Ceylon Graphite Project, Alabama, USA.

As per the Quarterly Update on 29^th October 2021, its sales receipts for 1QFY22 were reported as Nil and closed the quarter with a cash balance of ~AUD 3.42 million at the end of 30^th September 2021 versus ~AUD 5.05 million at the end of 30^th June 2021. On 19^th October 2021, Mr Merrill Gray joined HXG as a Managing Director. As per the Annual Year Report released on 23^rd September 2021, other income was reported as ~AUD 0.38 million in FY21 versus ~AUD 0.52 million in FY20. It reduced its Net Losses after Taxes Y-o-Y and reported as ~AUD 1.81 million in FY21 as against the net losses after tax of ~AUD 2.34 million for FY20.

Technical Analysis: HXG prices are sustaining above the horizontal trend line support level at AUD 0.088 and continuously taking support of the same on the weekly chart. Moreover, the prices are trading above the trend-following indicators 21-period SMA and 50-period SMA, which may act as a support level. The leading indicator RSI (14-period) is trading at ~50.94 level indicating bullish momentum. An important for the support levels stock is placed at AUD 0.074 while resistance level is at AUD 0.11.

Considering the recent anomalies, earn-in proposal and its current price levels, it is prudent to suggest the investors with a high-risk appetite a ‘Speculative Buy’ stance along with incorporating the support and resistance as one of the tools while analysing the investment opportunity. The stock was analysed as per the current market price of AUD 0.088 per share, as of 22^nd November 2021, 11:51 AM (GMT+10), Sydney, Eastern Australia. However, the risk levels are extremely high in view of the further updates on drilling and their findings.

Weekly Technical Chart – HXG

Source: REFINITIV

Little Green Pharma Limited (ASX: LGP)

LGP was founded in 2016, it is engaged in cultivation, manufacturing, development and selling of medicinal cannabis to Australian, European and overseas markets. Its market capitalization stood at AUD 156.90 million as of 22^nd November 2021.

Financial and Operational Updates: As per the update on 29^th October 2021, LGP confirms the receipt of AUD 0.21 million under the job keeper payments for FY21 as compared to AUD 0.12 million in FY20. As per the Quarterly Activities Report on 27^th October 2021, the revenue (unaudited) for 1QFY22 was reported as AUD 3.18 million and made a record month sale of AUD 1.39 million in September 2021. Its sales receipts for 1QFY22 were reported as ~AUD 1.587 million and cash balance at the end of 30^th September 2021 was reported at ~AUD 29.176 million versus ~AUD 40.27 million at the end of 30^th June 2021. In FY21, it converted its Net losses after tax of ~AUD 9.32 million for FY20 to Net Profits after Tax of ~AUD 24.60 million in FY21. The main reason of improvement in profitability is tripling in its revenue from ~AUD 2.20 million in FY20 to ~AUD 7.00 million in FY21. Below are some of the updates during the recent quarter period.

• LGP completed ~AUD 6 million WA facility property acquisition and obtained 9 licenses to supply psilocybin.
• It had witnessed a ~39% growth (PcP) in patients in Australia, contributing to 4,580 new patients.
• In the month of September 2021, LGP imported its first shipment of “Billy Buttons” THC 16 Cannabis (~50 kilograms) from the recently acquired Danish Facility.

Technical Analysis: On a weekly chart, LGP’s stock prices are consolidating below an upward sloping trend line breakout, indicating the possibility of a downside movement. The CMP is struggling to surpass its 50-period SMA and 21-period SMA, which may act as a crucial resistance zone in the short term. Moreover, the momentum oscillator RSI (14-period) is hovering around mid-point and trading at ~45.296 level, indicating the lack of strength in the prices and a directionless movement. An important support level for the stock is placed at AUD 0.600, while the key resistance is at AUD 0.750.

Considering the negative operating cash flows in 1QFY22 and decline in the cash balance, a ‘Watch’ stance is suggested while also incorporating its expected sideways movement for the short-term. The stock was analysed as per the closing price of AUD 0.665 per share, as of 22^nd November 2021.

Weekly Technical Chart – LGP

Source: REFINITIV

Inhalerx Limited (ASX: IRX)

Formerly known as Lifespot Health Limited, IRX is an Australian medical technology company which develops and sells inhaled therapies and medicine delivery systems that are used in cannabis. Its main product is Medihale. IRX was incorporated in 2016 and holds market capitalization at AUD 16.84 million as of 22^nd November 2021.

Financial and Operational Updates: As per the Quarterly Update on 1^st November 2021, German Loan was settled with cash of AUD 42k with the transfer of trademarks to InhaleRx. The joint efforts on developing Medihale with EC Pharma Ltd., is about to launch in December 2021 quarter. Net cash used for operating activities were ~AUD 401k in 3QFY21 with the maximum amount of AUD 96k in R&D for an FDA regulatory pathway project and ended its 3^rd Quarter with the cash balance was reported as ~AUD 3,094k at the end of 30^th September 2021 (3QFY21) versus ~AUD 3,455k at the end of 30^th June 2021 (2QFY21). As announced on 13^th October 2021, Cannvalate Pty Ltd increased its substantial shareholding in IRX from ~19.21% to ~19.90%.

Technical Analysis: On the weekly chart, IRX stock prices are hovering around the falling trend line resistance zone at AUD 0.118 level and sustaining below the trendline. Moreover, the prices are trading below the trend-following indicator 50-period SMA, which may act as a crucial resistance zone. The momentum oscillator RSI (14-period) is trading at ~51.23 level, indicating a lack of momentum in the price. An important support level for the stock is placed at AUD 0.090 while resistance level is at AUD 0.110.

Keeping in mind its directionless and lack of momentum in price levels, and nil cash receipts from customers in 3QFY21, it is prudent to suggest the scrip as A ‘Watch’. The stock was analysed as per the closing price of AUD 0.100 per share, as of 22^nd November 2021.

Weekly Technical Chart – IRX

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 Blue colour line reflects the 50-period moving average. SMA helps to identify existing price trend. If the prices are trading above the 50-period, then it shows prices are currently trading 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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