Netlinkz Limited (ASX: NET)

NET is a ’Network as a Service’ (NaaS) provider, both physical and virtual, to all sizes of organizations. The current market capitalization as of 17^th September 2021 stood at $71.09 million, trading at a stock price of $0.022 per share.

Financial & Operational Updates – As per the preliminary financial report for FY21, published on 31^st August 2021, revenue from customers was up by 174% Y-o-Y to $14.39 million in FY21. However, even after such an increase in revenue, net loss after tax from the ordinary activity was down by just 1% Y-o-Y to $23.75 million for FY21. The reason behind losses can be owed to the additional operating costs incurred for the development of an in-house team in China, which will be leveraged for future market growth in ROW (Rest of the World). The company closed its accounts for FY21 by stating a Cash Balance of $10.84 million, up from $1.44 million in FY20. Also, Net debt decreased from $14.14 million in FY20 to $1.34 million in FY21.

Technical Analysis: The NET price witnessed a downward rally from its 52-week high at $0.095 to CMP at $0.022, very near to 52-week low at $0.020 reached on 23^rd June 2021. The momentum oscillator RSI (14-period) is hovering near an oversold territory at ~36.146 level, further indicates the upside recovery in prices from the support levels. Prices are placed just below the 21-period SMA which is acting as an immediate resistance level, break of the same could lead the prices up to AUD 0.036 levels.

The company reported net losses in FY21, but a substantial increase in revenue and widening its wings in the global market indicates a positive stance. On the technical front, considering CMP touching almost the support and 52-week low price, and the RSI level, investors with 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 price of $0.022, as on 17th September 2021, 11:18 AM (GMT+10), Sydney, Eastern Australia. However, the risk levels are extremely high in view of the continuous net losses.

Daily Technical Chart – NET

Source: REFINITIV

Dicker Data Limited (ASX: DDR)

DDM is a wholesale distributor of computer hardware, software, and other products like accessories, cloud, data centre, data management, gaming, remote working, etc., in Australia and New Zealand. The company was incorporated in 1972 and is based in Sydney, Australia. Its customers include Cisco, Citrix, Dell Technologies, Hewlett Packard Enterprise, Lenovo, Microsoft. The current market capitalization as of 17^th September 2021 stood at $2.29 billion, at a stock price of $13.28 per share.

Financial & Operational Updates – As per the first half financial result 2021 announcement on 26^th August 2021, the revenue was up by 6.3% Y-o-Y to ~$1,069 million in 1HFY21 versus ~$1,006 million in 1HFY20. Net profit after tax was up by 9.2% Y-o-Y to ~$32.09 million in 1HFY21. Operational Expenses increased by 3.3% Y-o-Y in 1HFY20 to $1.6 million, but on the brighter side, there is a minor decline in operational expenses as a percentage of sales at 4.8% in 1HFY21 versus 4.9% in 1HFY20. The cash balances stood at $45.2 million at the end of 1HFY21, and fully franked interim dividend reported at 0.09 cents per share, declared on 17^th August 2021.

Other Updates: On 9^th August 2021, it announced the completion of Exeed Group’s (2^nd largest IT Distributor in NZ) acquisition for a total consideration of $68 million on a cash-free and debt-free basis.

Technical Analysis: On the daily chart, DDR has shown an uptrend from the start of the year, but after making a new 52-week high of $16.600 in August 2021, it started to move downside and made a low of $12.42. The RSI (14-period) is moving in a mid-range territory at ~46.64 level, along with the 21-day simple moving average (SMA) is hovering above the CMP and thereby implying more correction in the short-term.

After considering the company’s financial performance in 1HFY21, support & resistance, and the RSI level, investing in this stock at such elevated prices reduces the margin of safety, hence it's suggested to ‘Watch’ and re-evaluate the stock once the prices approach the support levels. The stock was analyzed as per the closing price of $13.28 per share, down by ~0.076%, as of 17^th September 2021.

Daily Technical Chart – DDR

Source: REFINITIV

Nexus Minerals Limited (ASX: NXM)

NXM is a gold exploration and production company in Western Australia. The company was incorporated in 2006 and is based in Perth, Australia. Its projects include Wallbrook Gold Project, Bethanga Porphyry Copper-Gold Project, Pinnacles Joint Venture Gold Project, Pinnacles Regional Gold Project and Mt Celia Gold Project. Market capitalization stood at $85.45 million as of September 17^th, 2021, at a stock price of $0.340 per share.

Financial & Operational Updates – As per the announcement on 8^th September 2021, multiple high-grade gold intercepts were discovered from 13 reverse circulation (RC) holes drilled at Templar Prospect in the Wallbrook Gold Project. As per the announcement on 28^th July 2021, NXM started its ground activities at Bethanga Porphyry copper-gold project in Northeast Victoria. There are no cash receipts from customers in 4QFY21. But on full-year basis ending June 30, 2021, NXM realized cash receipts of $109k from customers. A decrease in cash equivalents has been observed at the end of 4QFY21 as $8.99 million Vs $10.23 million at the end of 3QFY21.

Technical Analysis:  NXM’s prices picked up momentum from August 2021 and made a new 52-week high of $0.395 on 14th September 2021. On the daily chart, the momentum oscillator RSI (14-period) is trading in an overbought zone at ~75.232 level, which indicates the possibility of a downside correction from the higher levels. However, the prices are trading above the trend-following indicators 21-period SMA, which may act as a crucial support level for the stock.

The company is yet to generate sizeable revenues. While on technical front, considering the support & resistance and the RSI, investing in this stock at such elevated prices reduces the margin of safety, hence it's suggested to ‘Watch’ for the support levels as well as any improvement reported in the mining activities. The stock was analysed as per the closing price of $0.34, down by ~2.858%, on 17th September 2021.

Daily Technical Chart – NXM

Source: REFINITIV

Fenix Resources Limited (ASX: FEX)

FEX is engaged in the exploration, development, and mining of mineral tenements in Western Australia. Incorporated in 2007 in Subiaco, its market capitalization stands at $146.38 million, with the current price at $0.295 as of 17^th September 2021.

Financial & Operational Highlights – As per the annual report released on 15^th September 2021, FEX reported revenue of ~$114 million and NPAT of~$49 million in FY21 after its maiden shipment of Iron Ridge product. The cash balance increased to ~$69 million as of 30 June 2021 from $1.29 million as of 30 June 2020. In addition, to cheer its shareholders, the company paid its maiden dividend of 5.25 cents per share fully franked in FY21.

Technical Analysis – FEX prices broke an upward sloping trend line by downside and since the breakout, prices are sustaining below the same trend line from the past 5 weeks further indicating selling pressure in the stock prices. The relative strength index is trading at 47.793, showing weak momentum for the prices. Prices are trading above 21-period SMA on weekly that acts as an immediate support level. On the higher side, AUD 0.330 is acting as an immediate resistance level.

With the maiden revenue in FY21, capital raise, and considering its support and resistance levels mentioned above, it is fair to suggest a ‘Watch’ stance. The stock was analysed as per the closing price of $0.295, down by ~-4.839%, on 17^th September 2021.

Daily Technical Chart – FEX

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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