Respiri Limited

RSH Details

Business Update: Respiri Limited (ASX: RSH) is an Australia-owned medical device company, specialised in research. Its technology helps in the detection of wheeze, which is a symptom of asthma. The company has multiple product offerings that include AirSonea, SonoSentry, Wholter and Pulmo Track computerised wheeze detection and the production of a mobile health application in Australia and Israel. The market capitalisation of the company as on 02 June 2021 stood at $67.22 million. As per a recent announcement, the company will appoint Theo Antonopoulos as its Chief Commercial Officer, effective 7 June 2021. Moreover, it has confirmed that it has received the expected April shipment of 3,700 wheezo units in May, and all of these devices have been ordered and placed with Cipla. It also undertook the delivery of 3,300 units in May, and an additional 5,000 units are in transit and are planned to be delivered in July.

Q3FY21 Financial Performance: During the quarter, the company recorded an improvement in operating cash outflows by 36% to $1.6m, compared to the previous quarter. RSH has reported a decline in cash receipts to $1,000 during the quarter due to a delay in manufacturing and shipment. It ended the period with a cash position of $9.9 million. The spending in R&D saw a significant decline to 67% compared to the previous quarter to $0.15 million.

Q3FY21 Cash Flow from Operations (Source: Company Reports)

Outlook: Despite the presence of challenges due to the shortage of semiconductor chips, the company has secured sufficient volumes to meet the production capacity of 12,500 devices per month from mid-2021.

Key Risk: There is a shortage of chips, semiconductors and Integrated Circuits (ICs) that has created a delay in commercial activities and has the potential to further impact the sector.  

Stock Recommendations: As per a recent announcement, the company has commenced sales through Superchem Pharmacy Network and onboarded three pharmacy banner groups, covering approximately 1,000 stores in Q3FY21. RSH also announced an agreement with renowned brand Terry White Chemmart (TWC). It has also made an off-market takeover bid of Adherium Limited. The stock of RSH is trading below its average 52-weeks’ levels of $0.070 -$0.250. The stock of RSH gave a positive return of ~29.16% in the past one year and a negative return of ~24.08% in the past one month. Considering current trading levels, shipment of wheezo units, securement of ICs to meet production volumes and the key risks associated with the business, we recommend a ‘Speculative Buy’ rating on the stock at the current market price of $0.093, as on June 02, 2021.

RSH Daily Technical Chart, Data Source: REFINITIV

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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.

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