Weebit Nano Ltd (ASX: WBT)

The company is a leading developer of next-generation semiconductor memory technology and its groundbreaking Resistive RAM (ReRAM) addresses the rising need for significantly higher performance and lower power memory solutions in a range of new electronic products.

Financial and Operational Highlights:

During Q2FY22, the company successfully demonstrated its ReRAM technology at 28nm and received first silicon demo wafers integrating its embedded ReRAM module. The company raised capital of $35.2 million to accelerate growth initiatives and technology development. It initiated environmental initiative with CEA-Leti to measure carbon footprint and filed five new patents, which are further protecting intellectual property. After the end of the quarter, the company presented its first crossbar ReRAM arrays and published a research paper on neuromorphic computing with IIT Delhi. Looking forward, the company is focused on attaining its goals in the embedded memory market by the end of CY22, which include transferring and qualifying its technology at SkyWater’s US fab and inking new licensing agreements with partners and customers. WBT is exposed to a risk arising from the shift in new technology, which could hamper its operations.

Technical Analysis: WBT price broke the downward sloping trend line by upside and the prices are sustaining above the same from past one week. RSI (14-period) is hovering at ~63.7 on a daily chart that indicates bullish price momentum for the stock. Prices are also trading above its 21 and 50-period SMA that also indicates bullish trend for the stock. Immediate support levels are AUD 3.35 and AUD 3.15 while immediate resistance levels are AUD 4.44and AUD 4.80.

Stock Recommendation: 

During FY21, the company recorded current ratio of 21.52x against the industry median of 1.24, indicating decent liquidity position to settle short-term obligations. In addition, the company had nil debt to equity ratio in FY21. Hence, Considering the decent liquidity position, nil debt to equity ratio in FY21, and key risks associated with the business, we recommend a “Speculative Buy” rating on the stock at the closing market price of $3.820, down ~3.292% as of 08 February 2022. However, the risk levels are extremely high considering the widening losses and shift in new technology.

Daily Technical Chart – WBT

Source: REFINITIV

DigitalX Limited (ASX: DCC)

DCC is a technology company providing blockchain technology development and digital asset funds management. It operates in three segments - Blockchain consulting and development, Asset Management, and Other.

Financial & Operational Update: The monthly report on funds under management reflects a new fund flow of $0.26 million in January 2022 and nil redemptions were made despite volatile markets. The company had total funds under management of $27.03 million. On a 12-month basis, its Bitcoin Fund and Digital Asset Fund delivered 12-month returns of 20.79% and 76.87%, respectively. As per the quarterly report, DCC had $51.51 million of total investments as of December 31, 2021. This represents cash, listed digital assets, and liquid investments. However, the total value of investments declined from $53.09 million posted in the preceding quarter. It had closed the period with a cash balance of $7.38 million, representing an increase of $170k from the previous quarter. Its DigitalXBitcoin Fund secured investment-grade research rating. The company executed a partnership agreement with Digital Finance Cooperative Research Centre to develop new applications in blockchain technology.

DCC is a profitable company with solid operating history. It had posted revenue of $9.71 million from operations in FY21, up from $421.9k in FY20. The company reported a net profit of $6.76 million in FY21 in contrast to a net loss of $6.84 million in FY20. It had sizeable expenses in employee costs and professional and consultancy fees.

Technical Analysis: DCC prices took support of the crucial 50-period SMA on a monthly chart and the prices moved up significantly afterwards. Stock prices also broke its immediate resistance level i.e. AUD 0.092 that further indicates bullish tone for the stock prices. RSI (14-period) is hovering at ~55.75 on a daily chart that indicates bullish price momentum for the stock. Prices are also trading above its 21 and 50-period SMA that also indicates bullish trend for the stock. Immediate support levels are AUD 0.083 and AUD 0.075 while immediate resistance levels are AUD 0.105 and AUD 0.115.

Stock Recommendation:  The stock of the company had delivered returns of ~72.72% in the past six months. Currently, the stock is trading below the average of its 52-week low and high levels of $0.048 and $0.158. On a TTM basis, DCC is valued at a Price/Book Value multiple of 1.6x as compared to the industry median of 3.7x (Technology industry). This reflects that the stock of DCC is undervalued at current trading levels, signifying accumulation opportunity. Considering the increase in fund flow, a surge in total investments, spurt in revenue and net profit in FY21, current trading levels, valuation based on TTM, and key risks associated with the business, we recommend a “Speculative Buy” rating on the stock at the current market price of $0.091, as of 8 February 2022, 3.50 PM (GMT+10), Sydney, Eastern Australia. However, the risk levels are extremely high considering the delay in the project, widening losses, and funding risks.

Daily Technical Chart – DCC

Source: REFINITIV 

Aeon Metals Limited (ASX: AML)

AML is a mining company with tenements in Copper, Cobalt, Gold, Lead, Zinc, Molybdenum, and Silver. It caters to customers in Australia. Some of its notable projects include the Walford Creek Copper-Cobalt project, Greater Whitewash Polymetallic Project, Ben Hur Copper project and 7B Copper/Gold project, and Forsayth Project. AML was listed in ASX on June 14, 2007.

Financial & Operational Update: AML received assay results from its pre-feasibility studies conducted at its Walford Creek Copper-Cobalt project located in northwest Queensland. The drilling results are in-line with the management expectations. It had begun updating mineral resources estimates. The company is now conducting the 2022 field season and it is slated to commence in May 2022. In December 2021, AML received a Federal Government R&D grant of $1.17 million. The company posted operating cash flows of $438k during the three months period. It had incurred $4.0 million towards exploration and evaluation. At the end of the December 2021 quarter, AML posted a cash balance of $2.8 million and had drawn debt of $26.3 million.

In FY21, AML registered a net loss of $6.06 million as compared to $5.40 million in FY20. This was an increase in administrative expenses and other expenses. AML plans to carry out further copper and cobalt resources exploration in FY22.

Technical Analysis: AML prices broke the downward sloping trend line by upside and the prices are sustaining above the breakout level from past 11 weeks that indicates bullishness for the stock prices. There is an 21-period golden crossover over 50-period SMA that further provide support to the prices. RSI (14-period) is hovering at ~53.75 on a daily chart that further indicates bullish price momentum. Immediate support levels are AUD 0.040 and AUD 0.0380 while immediate resistance levels are AUD 0.0525 and AUD 0.0635.

Stock Recommendation:  The stock of the company has been corrected by ~19.29% in the past six months. Currently, the stock is trading below the average of its 52-week low and high levels of $0.036 and $0.125. On a TTM basis, AML is valued at a Price/Book Value multiple of 0.7x as compared to the industry median of 2.5x (Metals & Mining industry). This reflects that the stock of AML is undervalued at current trading levels, signifying accumulation opportunity. Considering the possibility of resources update estimates following the assay results from 8,951 drilling at its Walford Creek Copper-Cobalt, positive operating cash flows, adequate liquidity, current trading levels, valuation based on TTM, and key risks associated with the business, we recommend a “Speculative Buy” rating on the stock at the closing market price of $0.046, down ~2.13% as of 8 February 2022. However, the risk levels are extremely high considering the delay in the project, widening losses, and funding risks.

Daily Technical Chart – AML

Source: REFINITIV 

Lumos Diagnostics Holdings Limited (ASX: LDX)

The company is engaged in the development, manufacturing and distribution of point-of-care diagnostic (POC) tests and associated readers for analysis of POC diagnostic tests. The company specialises in rapid, cost-effective, and complete point-of-care (POC) diagnostic test technology to help healthcare professionals more accurately diagnose and manage medical conditions.

Financial and Operational Highlights:

Recently, the company notified about support package by Victorian State Government to establish a manufacturing capability in Rapid Antigen Tests (RAT) in Victoria in collaboration with Lumos. The Government is likely to provide investment of $17.2 million in Diagnostics Manufacturing Facility and Innovation Hub. During Q2FY22, the company finished recruitment for investigator-led trial of FebriDx® at Box Hill Hospital Emergency Department. LDX expanded contract manufacturing services to support Diabetomics CovAb antibody test demand. Looking forward, the company continue to progress on Lumos’ 510(k) application to the U.S. FDA for FebriDx® and the decision for the same is expected during FY22. The company would continue to engage with new and existing clients to build out its contract development and manufacturing opportunities. At the end of the quarter, the company had a cash balance of US$10.5 million as compared to A$24.6 million as on 30 September 2021

Technical Analysis: LDX price broke the downward sloping trend line by upside and the prices are sustaining above the same from past six week further indicating upside potential for the stock prices. RSI (14-period) is hovering at ~54.15 on a daily chart that indicates bullish price momentum for the stock. Prices are also trading above its 21 and 50-period SMA that also indicates bullish trend for the stock. Immediate support levels are AUD 0.83 and AUD 0.70 while immediate resistance levels are AUD 1.16 and AUD 1.32.

Due to subdued financials, and current price 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 1.000 per share, down by ~6.452%, as of 08^th February 2022.

Daily Technical Chart – LDX

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 analysis has been achieved and is subject to the factors discussed above alongside support levels provided.

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.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

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