BluGlass Limited

BLG Details

BluGlass Limited (ASX: BLG) is a global leader in commercializing a breakthrough technology using Remote Plasma Chemical Vapour Deposition for the manufacturing of high-value semiconductor devices. The market capitalisation of the company, as on 15^th June 2021, stood at ~$28.90 million.

Result Performance (Half-Year Ended 31 December 2020 – H1FY21)

For the half-year ended 31 December 2020 (H1FY21), the company reported total revenue including other income of $2.22 million, an increase of 25.5% on the pcp. Total expenditure for the period increased by 19.7% to $5.90 million, driven by 63.6% increase in consumables expenses and 102.7% increase in depreciation expenses. During H1FY21, BLG received a $250,000 advanced manufacturing federal government grant to manufacture smarter, more efficient plasma deposition sources. Net loss for H1FY21 stood at $3.68 million, up 16.5% on the pcp.

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Key Data (Source: Company Reports)

Q3FY21 Update:

During the period, the company reported customer revenue of $117,000, of which $84,000 was for microLED and LED foundry services, and $33,000 was laser diode revenue. While revenue was low for the period, customer engagement remains high. The company ended the period with a cash position of $2.5 million as of 31 March 2021.

Outlook:

BluGlass looks forward to launching its first laser diode commercial product in FY21. The company expects to gain an R&D rebate of $2.5 million to $3.0 million at the end of the financial year. The company is focused on Laser Diode product development. Several products are in the advance stage of manufacturing supply chain. Besides, multiple packaging solutions are currently in the manufacturing pipeline. In the meanwhile, the company has appointed laser diode expert Dr Arkadi Goulakov as a senior Laser Scientist who is expected to add value.

Key Risk:

BluGlass is exposed to supply-chain disruptions arising out of natural calamities or with the spread of the pandemic. Besides, it is exposed to financial risks including the interest rate and credit risks.

Technical Overview:

Weekly Chart –

Source: REFINITIV

Note: Purple colour lines are Bollinger Bands® with the upper band suggesting overbought status while the lower band oversold status, and yellow lines are Fibonacci retracement lines which measure price rebound and backtrack. https://www.bollingerbands.com/

The stock has been down trending for several weeks with lower-high and lower low candles formed on the chart. The technical indicator RSI with a reading around 24 suggests weaker momentum while being in the state of the oversold condition.

Going forward, the stock may have resistance around the 61.8% retracement level of $0.060 whereas support could be around $0.018.

Stock Recommendation:

The company’s current ratio for H1FY21 stood at 5.38x, better than the H1FY20 result of 4.82x, implying an improvement in the company’s liquidity position. Its Debt-to-Equity ratio for H1FY21 stood at 0.18x, lower than the H1FY20 result of 0.20x.

The stock declined by ~38.8% in 1 month. It has made a 52-week low and high of $0.025 and $0.128, respectively.

Considering the aforesaid facts, we give a “Speculative Buy” rating on the stock at the current market price of $0.036 per share, down by 10% as on 16^th June 2021.

WAM Microcap Limited

WMI Details

WAM Microcap Limited (ASX: WMI) is a listed investment entity. It invests primarily in equities listed on the Australian Securities Exchange.  It has a market capitalization of ~$397.91 million as on 16^th June 2021.

Result Performance (Half-Year Ended 31 December 2020 – H1FY21)

The company during the interim period achieved a 149.9%  YoY increase in operating profit after tax to $49.20 million. The operating profit for the period is reflective of the strong performance of the investment portfolio over the same period last year. The investment portfolio increased by 36.4% YoY while holding in cash on average increased by 14% YoY, outperforming the S&P/ASX Small Ordinaries Accumulation Index by 16.1%. WAM Microcap provided the shareholders with the total shareholder return of 61.0% for 6 months ended 31^st December 2020. This reflects on the company’s Microcap’s strong investment portfolio performance and the increase in share price relative to NTA.   

The Board of Directors declared a fully franked interim dividend of 4.0 cents per share, representing a 33.3% increase on the FY20 fully franked interim dividend.

Key Data (Source: Company Reports)

Outlook:

There has been a strong recovery in global equity markets in general and the Australian equity market in particular which is supported by growth in the leading economies. However, governments continue to oscillate between re-opening and locking down economies amidst reports on the spread of a new variant of Coronavirus, thereby, creating uncertainty at the market place. Besides, faster economic recoveries in developed economies including Australia have given the rise of concerns on the continuation of low-interest-rate policy and policy of asset buying. Given this level of uncertainty, equity markets are likely to get volatile with the potential of a downside correction in the near future.

Key Risks:

The global economy is yet to recover fully as new covid-19 variants are emerging across the globe, thereby, slowing down growth.

Technical Overview:

Weekly Chart –

Source: REFINITIV

Note: Purple colour lines are Bollinger Bands® with the upper band suggesting overbought status while the lower band oversold status, and yellow lines are Fibonacci retracement lines which measure price rebound and backtrack. https://www.bollingerbands.com/

After making a high of $2.23, the stock came under selling pressure, pushing the stock below the 23.6% retracement level of $1.89. However, for the last few of weeks, it has been hovering around the 23.6% retracement level. For the ongoing week, it has given a softer close at $1.915. The technical indicator RSI with a reading around 52 and a curve at the end pointing down suggests a softening of bullish momentum.

Going forward, the stock may have resistance around 20 periods SMA of $1.970 whereas support could be around the 38.2% retracement level of $1.688.

Stock Recommendation:

The global equity markets are quite uncertain considering the broader macro-economic environment as well as the risks related to COVID-19 pandemic. The stock of the company rose by ~58.5% in 1 year. Over the time span of 9 months, the stock increased by ~30.02%. It has made a 52-week low and high of $1.159 and $2.230, respectively.

Considering uncertain market conditions and the current trading level of the company’s share, it would be prudent for investors to book profit at the current levels.

Therefore, we give a “Sell” rating on the stock at the current market price of $1.915 per share, down by 0.261% as on June 16, 2021.

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 on 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 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 uptrend may take a pause due to profit booking or selling interest.

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