Golden Nugget Online Gaming Inc

Golden Nugget Online Gaming Inc (NASDAQ-GM: GNOG) is a digital sports entertainment and online gaming Company. The Company is offering Live Casino Floor and Live Dealer to the US online gaming market.

Investment Highlights - Golden Nugget Online Gaming Inc – Expensive at USD 20.88

• The Company’s operations were significantly impacted by the covid-19 pandemic due to travel restrictions and gaming venue closures.
• In the last one month, the Company delivered a negative return of ~6.58% and delivered lower returns compared to the benchmark Index.
• As per valuation metrics, EV/Sales multiple of the Golden Nugget Online Gaming Inc is currently higher as compared to the corresponding multiple of the Investment Holding Companies industry, reflecting overstretched valuations.
• From the technical standpoint, 14-day RSI is supporting downward movement (around 53 level), which means the stock price could decline in the short term.

Key Risks

• The disruptive technology trends and cybercrimes also impose a risk to the business model.
• The Company could have a potential regulatory risk to online gambling services.

Financial Highlights – 9M FY2020 (30 September 2020) (released on 5 January 2021)

• In the nine months period of the financial year 2020, driven by higher casino revenue, the total revenue increased to $68,091 thousand compared to FY2019 data.
• The profitability on a proforma basis improved as compared to FY2019 data.
• The cash and cash equivalents on proforma basis stood at $85,215 thousand as on 30 September 2020.

One Year Share Price Chart

(Source: Refinitiv, chart created by Kalkine Group)

Conclusion

The Company has shown an improvement in financial performance in the nine months period of the financial year 2020 compared to the financial year 2019 data. Both the top-line and the bottom-line performance improved, while profitability remained in the negative zone. GNOG operations were significantly impacted by the outbreak of covid-19 pandemic and venue closure. However, the Company has been focusing on strengthening its balance sheet and return with capital discipline. Presently, the Company is trading near a 52-week high, raising doubts at its upside potential at current prices. The stock made a 52-week low and high of USD 8.82 and USD 27.18, respectively.

Based on the factors as highlighted above, we believe the stock of Golden Nugget Online Gaming Inc is “Expensive” at the closing price of USD 20.88 (as on 20 January 2021), with support from few catalysts needs to be evaluated at a later stage such as improvement in trading after reopening of venues globally.

ZIOPHARM Oncology Inc

ZIOPHARM Oncology Inc (NASDAQ-GS: ZIOP) is a Pharmaceuticals & Biotechnology Company. The Company is focussed on the development of products in immuno-oncology to deliver viral and cell-based therapies for cancer treatment.

Investment Highlights - ZIOPHARM Oncology Inc – Avoid at USD 3.76

• The Company remained in the development stage and did not have any product approval for sale and marketing, which resulted in no revenue generation.
• In the last one year, the Company delivered a negative return of ~15.70% and delivered lower returns compared to the benchmark Index.
• As per valuation metrics, Price/Earnings multiple of the ZIOPHARM Oncology Inc is currently higher as compared to the corresponding multiple of the Biotechnology & Medical Research industry, reflecting overstretched valuations.
• From the technical standpoint, 90-day RSI is in the overbought zone and is supporting downward movement (around 81 level), which means the stock price could decline in the short term.

Key Risks

• The market conditions in which the Company operates is full of challenges and might impact the operational and financial performance.
• Liquidity and interest rate risks could affect the operations of the Company.

Recent News

On 14 January 2021, ZIOPHARM Oncology announced the selection of James Huang as board’s Chairman effective immediately.

Financial Highlights – Q3 & 9M FY2020 (30 September 2020) (released on 5 November 2020)

(Source: Quarterly Report, Company Website) 

• In the Q3 and 9M of the financial year 2020, the Company remained in the development phase and did not generate any revenue.
• Due to higher general & administrative and research & development expenses, the loss from operations increased in Q3 and 9M FY2020.
• The cash balance as on 30 September 2020 surged to $135,471 thousand (31 December 2019: $79,741 thousand).

One Year Share Price Chart

(Source: Refinitiv, chart created by Kalkine Group)

Conclusion

The Company has shown an increase in financial performance in the third quarter and nine months period of the financial year 2020. The Company is in the development stage and hence rely on grants and cash balances to carry on all the business activities. The Bottom-line performance has improved significantly, with profitability remained in the negative zone. ZIOPHARM Oncology does not have an estimate for expenses, the timing of future cash needs, use of cash and expected capital requirements. The Company’s operational performance was materially impacted by the impact of covid-19 as it resulted in a disturbance in clinical trials due to strict social distancing norms. The stock made a 52-week low and high of USD 1.80 and USD 4.66, respectively.

Based on the above rationale, we have given an “Avoid” recommendation on ZIOPHARM Oncology Inc at the closing price of USD 3.76 (as on 20 January 2021), and with support from few catalysts needs to be evaluated at a later stage such as the signing of agreements with companies and universities.

Future Fintech Group Inc

Future Fintech Group Inc (NASDAQ-CM: FTFT) is engaged in the business of research, development and application of technology related to blockchain.

Investment Highlights - Future Fintech Group Inc – Avoid at USD 5.96

• Despite the improved performance in nine months period of FY2020, the Company is not able to provide meaningful guidance and forecast is extremely uncertain for global and Chinese economy.
• In the last week, the Company delivered a negative return of ~25.13% and delivered lower returns compared to the benchmark Index.
• As per valuation metrics, EV/Sales and EV/EBITDA multiples of the Future Fintech Group Inc are currently higher as compared to the corresponding multiple of the Software & IT Services industry, reflecting overstretched valuations.
• From the technical standpoint, 14-day RSI is supporting downward movement (around 56 level), which means the stock price could decline in the short term.

Key Risks

• Increased competition could reduce the number of available investment opportunities.
• The Company is also exposed to various operational and financial risks with cybercrime, regulatory changes, and foreign exchange fluctuations.

Financial Highlights – Q3 & 9M FY2020 (30 September 2020) (released on 16 November 2020)

(Source: Quarterly Report, Company Website) 

• In the third quarter and nine months period of the financial year 2020, due to lower revenue from sales of goods and service fees, the total revenue declined significantly.
• The Company reported a significant increase in a net loss in the third quarter of FY2020, while for nine months period, the Company reported net income.
• The cash balance as on 30 September 2020 increased to $957,676 (31 December 2019: $531,067), reflecting an increase in net cash from financing activities.

One Year Share Price Chart

(Source: Refinitiv, chart created by Kalkine Group)

Conclusion

The Company has shown a decline in financial performance in Q3 FY2020, while financial performance improved in 9M FY2020. FTFT witnessed a significant decline in revenue and profitability in the third quarter. The Company’s liquidity position improved, while reported a poor balance sheet. The Company’s operational performance was significantly impacted by the outbreak of the covid-19 pandemic due to travel restrictions, temporary closure of office buildings and quarantines. Future Fintech Group does not have access to any RCF (revolving credit facility) and has no assurance in securing commercial debt financing in the near future, which could have a negative impact on the business as additional capital is required. The stock made a 52-week low and high of USD 0.65 and USD 11.29, respectively.

Based on the above rationale, we have given an “Avoid” recommendation on Future Fintech Group Inc at the closing price of USD 5.96 (as on 20 January 2021), and with support from few catalysts needs to be evaluated at a later stage such as strong recovery in the Chinese economy from where all revenue is generated.

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