Stocks’ Details

Vmoto Limited

Quarterly Update (For the Period Ended 30 September 2020): Vmoto Limited (ASX: VMT) is engaged in the development of Lifestyle brands including Vmoto motorcycles. As on 19 November 2020, the market capitalization of the company stood at ~$130.93 million. During the quarter ended 30 September 2020, the company reported record sales of 7,009 units, reflecting an increase of 10% on 2Q20. At the end of the same period, international sales unit of the company exceeded the sales unit of its main competitor, Niu Technologies, validating the leading market position and competitiveness of VMT. The company also reported a cash balance of $16.3 million and delivered positive operational cash flows of ~$370k.

International Sales Units (Source: Company Reports)

Outlook: The company continues to execute its strategy of selling high-value vehicles into international markets and is building a global B2C distribution network. The products of the company are gaining market recognition and its decent sales network will continue to increase its brand and product awareness.

Stock Recommendation: With the social distancing norms and initiatives to adopt electric vehicles, the company seems to be well-positioned to benefit in the longer term. However, the stock of VMT is trading close to its 52-weeks’ high level of $0.670 and retains limited potential for further growth. The stock of VMT gave a return of 78.84% in the past one year but a negative return of 12.26% in the last one month. On a technical front, the stock has a support level of ~$0.29 and a resistance level of ~$0.57. On the TTM basis, the stock of VMT is trading at an EV/Sales multiple of 2.4x, higher than the industry median (Consumer Cyclicals) of 1.7x, and thus seems overvalued. Considering the current trading levels, volatile returns in the past one month, softer market conditions, and key investment risks, we suggest investors to wait for better entry levels and give an ‘Expensive’ rating on the stock at the current market price of $0.465, down by 2.106% on 19 November 2020.

Immuron Limited

US DoD NMRC Response to Vaccine: Immuron Limited (ASX: IMC) is a biopharmaceutical company which is focused on oral immunotherapy treatments using dairy-derived antibody products for the treatment of gastrointestinal health and liver diseases. As on 19 November 2020, the market capitalization of the company stood at ~$56.70 million. The company has recently announced that Naval Medical Research Center (NMRC) has confirmed that the conjugated vaccine produced immunological response in cows and reported that the new Hyperimmune therapeutic contains high levels of antibodies and are likely to protect against diarrhea induced by ETEC and CFA/1. The human infection-model clinical trials are scheduled in 2021, wherein one trial will focus on ETEC infections and the second trial will focus on the ability of the hyperimmune product to protect volunteers against moderate to severe campylobacteriosis.

FY20 Financial Highlights: During FY20, the company reported a slight increase in revenue to $2.51 million from $2.38 million in FY19 and a rise in gross profit to $1.82 million from $1.72 million in FY19. In the same time span, loss of the company went down to $2.92 million from $4.65 million in FY19. However, the company reported a fall in its cash balance to $3.25 million from $5.11 million in FY19.

FY20 Financial Highlights (Source: Company Reports)

Stock Recommendation: The group aims to create value for shareholders and is clinically developing products. As per ASX, the stock of IMC is inclined towards its 52-weeks’ low level of $0.05. The stock of IMC gave a negative return of 30.13% in the past three months and a negative return of 1.92% in the last one month. On a technical front, the stock of IMC has a support level of ~$0.15 and a resistance level of ~$0.32. Considering the current trading levels, falling losses, decent financial performance, and US DoD NMRC Response to Vaccine, we recommend a ‘Speculative Buy’ rating on the stock at the current market price of $0.265, up by 6% on 19 November 2020.

Lucapa Diamond Company Limited

Successful Placement Raises $10 Million: Lucapa Diamond Company Limited (ASX: LOM) is engaged in the production of high-value diamond from the Lulo alluvial mine in Angolo and the new Mothae Kimberlite mine. As on 19 November 2020, the market capitalization of the company stood at ~$41.08 million. The company has recently issued 181,818,182 fully paid new ordinary shares at a price of $0.055 per share to raise $10 million before costs. The placement also involved the issue of 54,824,075 free attaching unlisted $0.08 options, expiring 2 years from the date of issue. The company intends to use these funds for an expansion in the processing capacity of the Mothae kimberlite mine.

Mothae Value Accretive Expansion: The company has recently updated on the expansion plan of the 70% owned Mothae kimberlite diamond project and reported that the capacity of the Mothae processing plant can be increased by ~45% to 1.6Mtpa. This is likely to increase the production, revenues, and may also result in improvement in unit operating costs and earnings.

Quarterly Highlights (For the Period Ended 30 September 2020): During the quarter ended 30 September 2020, the company reported record production at Lulo and recovered 9,387 carats. In the same time span, it reported sales of US$11.6 million at a price of US$1,162 per carat. At the end of the quarter, the company reported a cash balance of US$1.5 million and held 784 carats in diamond inventory.

Quarterly Highlights (Source: Company Reports)

Stock Recommendation: With the onset of the global pandemic, the group might face softer market conditions in the diamond industry. The company has scheduled its AGM on 17 December 2020. As per ASX, the stock of LOM is trading close to its 52-weeks’ low level of $0.042 but may witness volatility in its performance. The stock of LOM gave a negative return of 22.72% in the past three months and a negative return of 21.53% in the last one month. On a technical front, the stock of LOM has a support level of ~$0.048 and a resistance level of ~$0.07. Considering the current trading levels, volatile returns in the past three months, softer market conditions, and key investment risks, we suggest our investors to keep an eye on the business activities and give an ‘Avoid’ rating on the stock at the current market price of $0.052, up by 1.960% on 19 November 2020. 

Sensera Limited

Quarterly Highlights (For the Period Ended 30 September 2020): Sensera Limited (ASX: SE1) is a designer and manufacturer of specialized high-performance Micro-Electro-Mechanical Systems. As on 19 November 2020, the market capitalization of the company stood at ~$25.12 million. During the quarter ended 30 September 2020, the company reported an improvement of 7% in revenue to US$2.4 million. However, IOT Solutions accounted less than half of this revenue level and did not operate profitably in the quarter, whereas MicroDevices (MD) achieved quarterly revenue of US$1.3 million with a gross margin of 55%. During the quarter, the company received US$2.03 million from its customers and used cash of US$1.06 million in operating activities.

Consolidated Statement of Cash Flows (Source: Company Reports)

Outlook: During the quarter, the company made significant progress on yield and functionality and expects to ramp its product into full production throughout FY21. It is evaluating opportunities to lower corporate costs and will implement further reductions in FQ2. Despite the COVID-19 pandemic, the company has moved multiple customers and opportunities to lay the foundation for FY21.

Stock Recommendation: As per ASX, the stock of SE1 is inclined close to its 52-weeks’ high level of $0.115 and thus retains limited potential for further growth. The company has scheduled its AGM on 9 December 2020. The stock of SE1 gave a return of 27.86% in the past three months but a negative return of 3.70% in the last one month. On a technical front, the stock of SE1 has a support level of ~$0.05 and a resistance level of ~$0.09. On a TTM basis, the stock of SE1 is trading at a P/BV multiple of 10.5x, higher than the industry median (Technology) of 5.3x, and thus seems overvalued. Considering the higher Debt/Equity ratio, volatile returns in the past one month, softer market conditions, and key investment risks, we suggest investors to keep an eye on the business activities and give an ‘Avoid’ rating on the stock at the current market price of $0.074, down by 5.129% on 19 November 2020.

Comparative Price Chart (Source: Refinitiv, Thomson Reuters)

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