Novonix Limited (ASX: NVX)

NVX is an Australian company which was incorporated in 2012, engaged in battery materials and technology. It operates in segments such as Graphite Exploration and Mining, Battery Technology, and Battery Materials. Its market capitalization stood at AUD 3.90 billion as of 7^th December 2021.

Financial & Operational Updates – On 3^rd December 2021, NVX was included in the list of S&P/ASX 200 Index. As per 24^th November 2021 announcement, NVX opened a new facility “NVX Riverside” (previously known as Chattanooga when acquired on 23^rd June 2021) in Tennessee, which will produce high consistency and high purity anode material mainly for electric vehicles.

As per the quarterly updates for the period ending 1QFY22 (September) released on 29^th October 2021, other than the receipt of CAD 1.675 million grant from Canadian federally funded non-profit organisation its cash receipts reduced and were reported as ~AUD 1.66 million for 1QFY22 versus ~AUD 2.02 million for 4QFY21. Phillips 66 announced strategic investment in NVX and nominated Zhanna Golodryga to NVX Board. Cash on hand at the end of 30^th September 1QFY22 was reported as ~AUD 290.97 million versus ~AUD 131.38 million during the preceding quarter period. As per the recent Annual Report for FY21, it recorded a ~22.9% increase in revenue from ordinary activities as ~AUD 5.22 million in FY21 vs ~AUD 4.25 million in FY20. Further, it had posted a decrease of ~9.7% in net losses to ~AUD 18.07 million.

Technical Analysis: Technical Analysis: NVX prices are sustaining above the horizontal trend line support level, indicating the possibility of an upside movement in the stock on the daily chart. The CMP is sustaining above the trend following indicator 50-period SMA, further suggesting an upside direction.  The leading indicator RSI (14-period) is trading at 43.87 levels reversing from the lower levels. Now an immediate resistance level for the stock appears at 9.40, while support is at 7.70.

With a view improvement in financial performance in FY21 and current RSI levels on the technical front, the investors with a 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 current price of AUD 8.400, as of 7^th December 2021, 10:46 PM (GMT+10), Sydney, Eastern Australia. However, the risk levels are extremely high in view of the customer churns, project risks, production and its saleability related risks.

Daily Technical Chart – NVX

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 Yellow colour line represents the Trendline.

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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