Pilbara Minerals Limited (ASX: PLS)

Incorporated in 2005, PLS is an Australian company engaged in mining, exploration, and development of mineral resources mainly lithium-tantalite. It operated in Western Australia and major projects are: Pilgangoora Lithium-Tantalite Project and Altura Lithium Operations (aka Ngungaju Lithium Operations). Its market capitalization stood at AUD 5.81 billion as of 14^th October 2021, at the stock price of AUD 1.97 per share.

Financial and Operational Updates: As per the release on 13^th October 2021, the ramp-up update on Pilgan Plant is expected to increase its production target to 360,000-380,000 dmt from earlier levels around ~330,000 dmt and PLS achieved first spodumene concentrate production at its Ngungaju plant In late FY21, it introduced an online platform “the Battery Material Exchange (BMX)”, for trading of its uncommitted spodumene concentrate production, which led to staged restart of the Ngungaju Plant in June FY21, targeting a production of 180,0000-200,0000 dmt commencing in March Quarter FY22 as per the release on 7^th October 2021. As per the announcement dated 6^th October 2021, the company saw 54% increase in total Proved and Probable Ore Reserve Tonnes with a 47% increase in the contained lithium-oxide as against FY20 at its Pilgangoora Lithium-Tantalite Project. As stated in September Quarterly Results on 6^th October 2021, ~85.75k dmt spodumene concentrate production was recorded as against ~77.16k dmt in June 2021 quarter and cash at the end of 30^th September FY22 was recorded as ~AUD 137.30 million. As per the FY21 Annual Financial report, revenue from ordinary activities was increased by ~108.9% Y-o-Y, from ~AUD 84.14 million in FY20 to ~$175.82 million in FY21. On the other hand, Net Loss for FY21 was decreased by ~48.2% and was stated as ~AUD 51.44 million in FY21 versus ~AUD 99.26 million in FY20.

Technical Analysis: After correcting from the 52- week high of AUD 2.53 touched on September 15, 2021, PLS stock prices are trading above the rising trend line support zone at AUD 1.82 and continuously taking support of the same on the daily chart. The momentum oscillator RSI (14-period) is trading at ~45.19 level indicates positive trend for the stock. An important support level for the stock is placed at AUD 1.82, while the key resistance level is placed at AUD 2.25.

Considering its increase in production target at its Pilgan Plant and Ngungaju Plant and its current price levels, PLS can be considered for a ‘Speculative Buy’ position by the investors with a high-risk appetite along with keeping the support and resistance level as crucial points. The stock was analysed as per the current price of AUD 1.97 per share, 10:40 AM (GMT+10), Sydney, Eastern Australia, as of 14th October 2021. However, the risk levels are high depending on the commodity price fluctuations.

Weekly Technical Chart – PLS

Source: REFINITIV

Myer Holdings Limited (ASX: MYR)

Incorporated in 2006, MYR is having almost 60 department stores across Australia, along with online business. It offers core product categories, womenswear, menswear, childrenswear, beauty, homewares, electrical goods, toys and general merchandise. It holds a market capitalization of AUD 431.17 million as of 14^th October 2021, at the stock price of AUD 0.535 per share.

Financial and Operational Updates: As per the announcement on ASX, MUFG (on 13^th October) and WAM, WGB, WMI and WAX (on 30^th September 2021), ceased to be substantial shareholder in MYR. As per the Annual Report for FY21 released on 5^th October 2021, revenue from operations increased ~5.5% Y-o-Y from ~AUD 2,519.4 million in FY20 to ~AUD 2,658.3 million in FY21 out of which ~20.3% is contributed through online sales. It converted its Net Losses of ~AUD 13.4 million in FY20 into Net Profit of ~AUD 51.7 million in FY21, supported by a ~10.2% Y-o-Y increase in Operating Gross Profit. Cash at the end of FY21 was reported at ~AUD 178.6 million as of 30^th June 2021 versus ~AUD 86.5 million in PcP. MYR is seeking for a transformational change in its supply chain and customer experience by expected announcement of the National Distribution Centre in FY22 and operational in FY23.

Technical Analysis: MYR prices witnessed a significant upside rally from the March 2020 low levels i.e., AUD 0.083. Prices broke the downward sloping trend line by an upside in the month of August 2021 and the prices are sustaining above the breakout level from past three months, indicating that the prices are hovering in a bullish trajectory. Prices are also trading above its 21-period and 50-period SMA on a monthly chart that also support our bullish stance. The next immediate support levels are AUD 0.500 and AUD 0.450 while the immediate resistance levels are AUD 0.635 and AUD 0.740.

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

With progress shown in the recent financials, improvement in profitability and upcoming Christmas Season, MYR seems to be a promising scrip, and keeping the support and resistance level as crucial points, a ‘Buy’ position is suggested. The stock was analysed as per the current price of AUD 0.535 per share, as of 14^th October 2021, 10:40 AM (GMT+10), Sydney, Eastern Australia.

Weekly Technical Chart – MYR

Source: REFINITIV

Calix Limited (ASX: CXL)

CXL was incorporated in 2005, offering industrial solutions and running five segments: Water, CO2 mitigation, Biotech, Advanced Batteries and Sustainable Processing. Its operational areas are Australia, New Zealand, Asia, Europe and the United States. It holds a market capitalization of AUD 883.93 million as of 14^th October 2021, at the stock price of AUD 5.48 per share.

Financial & Operational Updates – As per the announcement dated 14^th October 2021, Australian Super Pty Ltd. changed its substantial shareholding from 7.11% to 8.18%. As per the recent update released on 7^th October 2021, the company completed project studies at its Low Emission Intensity Lime and Cement (LEILAC-1), showing break-through CO2 capture technology at its facility in Belgium. It was awarded Euro 12 million towards the project from EU Horizon in 2020. While on the other hand, LEILAC -2 is currently on a FEED stage, and it expected to finish its investment by early 2022 and commissioning in late 2023/ early 2024. On 15^th September 2021, Carbon Direct invested AUD 24.5 million for 7% of stake in its LEILAC business. As per the Annual Report released on 24^th August, it has shown ~22% Y-o-Y increase in Total Revenue and other Income and reported as ~AUD 29.9 million for FY21 with a ~36% Y-o-Y growth in its Core Product Sales. It recorded total losses as ~AUD 9.10 million in FY21 versus ~AUD 7.07 million reported last year. Cash at the end of FY21 was reported as ~AUD 15.13 million as of 30^th June 2021 versus ~AUD 11.08 million in PcP.

Technical Analysis: CXL's prices are trading with higher highs and higher lows formation and currently consolidating around the lifetime high level. On the weekly chart, prices are sustaining above the trend-following indicators 21-period and 50-period SMA, indicating a positive trend for the stock. However, the leading indicator RSI (14-period) is trading in an overbought zone at ~75.07 levels, indicating the possibility of a downside correction.

Due to widening of losses in FY21 and its current overbought RSI levels it looks like a risky bet at this level, hence a ‘Watch’ stance is suggested. The stock was analyzed as per the closing market price of AUD 5.48 per share, up by ~3.396%, as of 14^th October 2021.

Weekly Technical Chart – CXL

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 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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