Frontier Digital Ventures Limited (ASX: FDV)

Incorporated in 2015, FDV invests and operates online classifieds business in undeveloped and emerging countries. Its focus is on automotive, properties and general classifieds. Its segments include Afribaba, Carwangu.com, iMyanmarhouse.com, CarsDB.com, Encuentra 24.com, IMCongo.com, LankaPropertyWeb.com, ToLet.com.ng, Meqasa.com, TechAfrica, and Corporate. FDV holds a market capitalization of AUD 514.50 million as of 20^th December 2021.

Financial & Operational Updates – As per the announcement dated 17^th December 2021, FDV entered the agreement of acquiring remaining ~73.7% ownership in Encuentra24 thereby consolidating its position in the LATAM region. On 30^th November 2021, Perennial Value Management Ltd (PVM) ceased its substantial shareholding in FDV. As per its 15^th November 2021 update, FDV plans to restructure its regional companies on geographical lines: FDV LATAM, FDV Asia and FDV MENA. It aims to enhance growth (organic and inorganic), bring operational efficiency, and strengthen its global presence. After one year of its acquisition of Fincaraiz, Avito, Tayara it has updated the following improvements in EBITDA:

As per its Quarterly Updates released for 3QFY21, it showed ~244% increase in cash receipts translating to ~AUD 1.2 million of EBITDA. Its revenue was up by ~248% on pcp basis and reported as ~AUD 17.3 million. Its cash used in operating activities was recorded as ~AUD 367k, while closed its accounts with a cash balance of ~AUD 17.2 million at the end of 30^th September 2021 versus ~AUD 18.7 million at the end of 30^th June 2021.

Technical Analysis: FDV stock prices are hovering around an upward sloping trend line support zone and continuously taking support of same on the weekly chart. Moreover, the momentum oscillator RSI (14-period) is trading at ~48.32 level, recovering from the lower levels. However, prices are trading below 21-period SMA, which may act as a resistance level for the stock. An important support level for the stock, is placed at AUD 1.36 while the key resistance level is placed at AUD 1.63.

Considering the restructuring plans and change in share ownership, 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 1.510 per share, up by ~0.666%, as of 20^th December 2021.

Weekly Technical Chart – FDV

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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