Peninsula Energy Limited (ASX: PEN)

Incorporated in 1993, PEN works in mining of Uranium and operates in segments namely, Lance Projects, Wyoming USA, Karoo Projects, South Africa and Corporate/Other. Its market capitalization as of 6^th December 2021 stood at AUD 224.39 million.

Financial & Operational Updates – As per the release of 2^nd December 2021, it concluded its Field demonstration operations in November and will commence the data analysis to update the technical assumptions at its uranium project. As per its quarterly report on 29^th October 2021, its sales receipts for 1QFY22 were reported as ~USD 9.91 million and closed the quarter with a cash balance of ~AUD 10.64 million at the end of 30^th September 2021 versus ~AUD 9.94 million at the end of 30^th June 2021.

Technical Analysis: After the prices broke the downward sloping trend line by upside in November 2021, prices are sustaining above the breakout level from past one month. Prices are also trading above its 21 and 50-period SMA on a monthly chart that further support our bullish stance. The RSI (14-period) has reached around mid-point from an overbought zone and trading at ~49.461 levels. The important support and resistance levels are AUD 0.174 and AUD 0.280, respectively.

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

*% Premium/(Discount) is based on our assessment of the company’s NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

Stock Recommendation: PEN has provided ~112% of return in past nine months and is trading below the average 52-week price level band of AUD 0.094 and AUD 0.350. The stock has been valued using EV/Sales multiple based illustrative relative valuation method and arrived at a target price with an upside of low double-digit (in % terms). For the purpose of valuation, peers like Energy Resources of Australia Ltd (ASX: ERA), Santos Ltd (ASX: STO), Washington H Soul Pattinson and Company Ltd (ASX: SOL), and others have been considered. The company can trade at a slight premium to its peers’ average, considering its lower debt-to-equity ratio over the industry and improved gross margin. After considering its quarterly results, upside potential as indicate by the valuation, updates on its uranium project, the investors with a high-risk appetite can consider it as a ‘Speculative Buy’ along with incorporating the support and resistance as one of the tools while analysing the investment opportunity. The stock was analysed as per the closing price of AUD 0.210 per share, down by ~6.667%, as of 6^th December 2021. However, the risk levels are extremely high in view of the future findings and its saleability.

Weekly Technical Chart – PEN

Source: REFINITIV

Harris Technology Group Limited (ASX: HT8)

HT8 was incorporated in 1998 and deals in online retailing catering to small and medium-sized businesses through its site, Amazon, ebay, and Kogan and Catch by providing Information Technology/Consumer Electronics (IT/EC) products. The current market capitalization as of 6^th December 2021 stood at AUD 35.73 million.

Financial & Operational Updates – As per its quarterly report on 25^th October 2021, it recorded a ~54% Y-o-Y increase in quarterly sales to ~AUD 15.1 million in 1QFY22 versus ~AUD 9.8 million pcp. It had achieved record sales in the month of August reaching ~AUD 5.6 million. With the positive operating cashflow of AUD 502k in 1QFY21, HT8 is maintaining its ranking of No.1 Seller in Amazon AU list.

It had closed the quarter with a cash balance of ~AUD 3.53 million at the end of 30^th September 2021 versus ~AUD 3.26 million at the end of 30^th June 2021. On 8^th November 2021, the company announced resignation of its Director Mr. Howard Chen. As per the Annual Report, through a dramatic shift from B2B and B2C business model to pure-play online retailer, HT8 clocked ~49% Y-o-Y increase in Normalised Operating Profit. Its revenue increased by ~206% Y-o-Y with NPAT increasing by ~73.7% Y-o-Y to AUD 1.75 million in FY21. Its marketing expenses reduced to ~AUD 0.063 million, while on the other hand employee costs increased to ~AUD 2.08 million in FY21.

Technical Analysis: HT8 prices are hovering near an upward sloping trend line support level and sustaining above the same. 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 momentum oscillator RSI (14-period) is trading at ~47.68 level. Now an immediate support level for the stock appears at 0.105 while resistance is at 0.140.

With a view on expanding in Gaming Category in FY22 and record high sales in the month of August and on the technical front, considering its current price levels and the RSI level, the investors with a high-risk appetite might consider a ‘Speculative Buy’ position, incorporating the support and resistance as one of the tools while analysing the investment opportunity. The stock was analysed as per the current price of AUD 0.118, as of 6^th December 2021, 12:44 PM (GMT+10), Sydney, Eastern Australia. However, the risk levels are extremely high in view of the increasing competition from traditional retailers. 

Weekly Technical Chart – HT8

Source: REFINITIV

Weebit Nano Limited (ASX: WBT)

By using the Resistive RAM (ReRAM) technology based on Silicon Oxide (SiOx), WBT creates semiconductor memory technology. Incorporated in 2010, its market capitalization as of 6^th December 2021 stood at AUD 429.73 million.

Financial & Operational Updates – On 3^rd December 2021, WBT raised ~AUD 9.9 million, wherein AUD 4.4 million was raised through Entitlement Offer. This was after AUD 25.7 million capital raise from four Israel-based Institutional Investment and Pension Funds on 10^th November 2021. Meitav Dash Investment Limited became a substantial shareholder with a voting power of ~5.44%.

As per the Annual Report, its revenue from ordinary activities remained nil as consistent with last year. Moreover, it increased its net losses substantially by ~180% to ~AUD 11.26 million in FY21 from ~AUD 4.02 million for FY20. Besides R&D expenditure, its sales and marketing expenditure increased substantially from ~AUD 0.26 million in FY20 to ~AUD 1.26 million in FY21. Cash at the end of FY21 was reported as ~AUD 21.73 million as of 30^th June 2021 versus ~AUD 4.11 million in PcP.

Technical Analysis: On the weekly chart, WBT price witnessed a breakout of the rising trend line support and prices are sustaining below the trend line. Moreover, the leading indicator RSI (14-period) is trading at ~48.01 level, indicating lack of momentum. The prices are trading below the trend-following indicator 21-period SMA, which may act as a crucial resistance zone. The crucial support level for the stock is placed at AUD 2.462, while the key resistance is at AUD 2.91.

After considering the company’s net losses and RSI levels, investing in this stock at such uncertain levels should be taken with calculated approach, hence a ‘Watch’ stance is suggested. The stock was analyzed as per the closing price of AUD 2.72 per share, down by ~7.168% as of 6^th December 2021.

Weekly Technical Chart – WBT

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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