Luminar Technologies Inc

Luminar Technologies Inc (NASDAQ: LAZR) develops software and autonomous vehicle sensors. It operates through two divisions, namely Autonomy Solutions and Component Sales.

On 9 June 2021, LAZR has scheduled its annual general meeting.

Investment Highlights – SPECULATIVE BUY at USD 24.73

• LAZR is on track to meet its targeted FY21 milestones with strong software development, recent win of commercial programs, robust order book, and solid liquidity and cash position.
• It recently added several new major customers - Airbus UpNext, Zensact, SAIC and Pony.ai, which can further support the future growth.
• It expects to hit the C-sample phase by FY21 end with progress in Iris Industrialization for Series Production.
• From a technical standpoint, 21-day EMA (USD 22.15) indicating an upward trend in the stock.
• Over the past two years (FY18 to FY20), revenue has surged at a CAGR of ~9.24%.

Key Risks

• The Covid-19 pandemic induced restriction affected its customers, which already had an impact on FY20 revenue generation. In addition, further mutation of the virus can adversely affect the operating results and worsen losses.
• The Company has a history of operating losses, and it depends on external financial resources to pursue growth objectives.

Recent News

Partnership: On 1 June 2021, LAZR announced a strategic partnership with four key organizations – CADIA, Automotive Innovation, PAVE and PAVE. This alliance can transform the automotive industry.

Financial Highlights (for the quarterly period ended 31 March 2021, as of 13 May 2021)

 (Source: Company website)

• During Q1 FY21, revenue increased 37% against Q1 FY20 and jumped 118% compared to Q4 FY20.
• However, net loss was aggravated due to significantly higher operating expenses.
• As of 31 March 2021, cash and investments were US$610.3 million, significantly higher than the balance reported at the end of FY20.

Share Price Chart

 (Analysis done by Kalkine Group)

Conclusion

LAZR remained on track to meet its FY21 revenue guidance of US$25 to US$30 million with net cash spend of around US$140 million. With major commercial wins, the Company is targeting a 40% growth in FY20’s order book level of US$1.3 billion. In March 2021, LAZR boosted its liquidity by US$153.9 million (cash proceeds) with the exercise of Public and Private warrants. Therefore, the Company has sufficient liquidity to manage expenses until it begins series production. The stock made a 52-week High and Low of USD 47.80 and USD 9.95, respectively. On the technical chart, the next important support level is at USD 20.27.

Based on the recent customer wins, enhanced liquidity, reiterated revenue guidance, favourable long-term market fundamentals, we have given a "SPECULATIVE BUY" stance on Luminar Technologies Inc at the closing market price of USD 24.73 (as of 7 June 2021).

Naked Brand Group Ltd

Naked Brand Group Ltd (NASDAQ: NAKD) operates in swimwear and intimate apparel business focused on online retailing.  

Investment Rationale – AVOID at USD 0.80

• It is a lossmaking entity operating in a highly competitive market space, which can confront a further deterioration of capital with loss of market share and revenue-generating capacity amid challenging economic conditions and depressed consumer spending patterns.
• The fluctuating cost of raw materials due to supply chain disruption can further hurt the financial condition.
• From a technical standpoint, Bollinger bands and 14-day RSI (62.46) is clearly giving an overbought signal. Therefore, price retracement can be expected in the short term.  
• All major profitability margins (except gross margin) have reported a negative figure over the past four years. Even gross margin has remained quite below the industry median of 53.5%.

Risk Assessments

• NAKD has a history of operating losses that may continue into the foreseeable future.
• It requires additional capital funding to pursue growth objectives, which may impair the value of its Ordinary Shares and dilute shareholdings.
• The business performance is further exposed to cyber incidents, market volatility, and fluctuating requirement of inventory level.

Recent News

Notice of Minimum Bidding: On 29 April 2021, Naked Brand received a notice from the Nasdaq Capital Market that the minimum bid price for NAKD’s shares was below US$1.00 per share for consecutive 30 business days.

Financial Highlights for the year ended 31 January 2021 (as on 18 May 2021)

 (Source: Company Website)

• Over the past four years, Naked Brands has shown a declining trend of revenue generation, while the comprehensive losses for the same period have been worsened.
• The net sales decline by 11.1% in FY21 against FY20, while the loss for FY21 increased by 25.8%. It reflected the disruption of the supply chain and temporary store closures due to the Covid-19 pandemic.
• During FY21, the Company incurred operating cash outflows of US$11.0 million and loss after income tax from continuing operations of US$68.3 million.

Share Price Chart    

 (Analysis done by Kalkine Group)

Conclusion

Naked Brand has a small market capitalization, and it has already received a notice from the Nasdaq Capital Market regarding the minimum bid price. It can delist from the exchange, which could limit investors’ ability to transact into the security. The Company has a history of operating losses, and it does not even provide any dividend. In a nutshell, it is a penny stock that is prone to volatile trading, and we do not have sufficient growth catalysts to punt on this stock. The stock made a 52 week High and Low of USD 3.40 and USD 0.0661, respectively.

Based on the uncertain outlook, macroeconomic uncertainties, and loss-making status, we have given a “AVOID” stance on Naked Brand Group Ltd at the closing price of USD 0.80 (as on 7 June 2021), while we look forward to taking fresh position when we have material fundamentals or catalyst for future profitability.

*The reference data in this report has been partly sourced from REFINITIV.

*Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached or if the price closes below the support level (indicative stop-loss price).

Disclaimer - This report has been issued by Kalkine Pty Limited (ABN 34 154 808 312) (Australian financial services licence number 425376) (“Kalkine”) and prepared by Kalkine and its related bodies corporate authorised to provide general financial product advice. Kalkine.com.au and associated pages are published by Kalkine.

Any advice provided in this report is general advice only and does not take into account your objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your objectives, financial situation and needs before acting upon it.

There may be a Product Disclosure Statement, Information Statement or other offer document for the securities or other financial products referred to in Kalkine reports. You should obtain a copy of the relevant Product Disclosure Statement, Information Statement or offer document and consider the statement or document before making any decision about whether to acquire the security or product.

You should also seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice in this report or on the Kalkine website. Not all investments are appropriate for all people.

The information in this report and on the Kalkine website has been prepared from a wide variety of sources, which Kalkine, to the best of its knowledge and belief, considers accurate. Kalkine has made every effort to ensure the reliability of information contained in its reports, newsletters and websites. All information represents our views at the date of publication and may change without notice.

Kalkine does not guarantee the performance of, or returns on, any investment. To the extent permitted by law, Kalkine excludes all liability for any loss or damage arising from the use of this report, the Kalkine website and any information published on the Kalkine website (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine hereby limits its liability, to the extent permitted by law, to the resupply of services.

Please also read our Terms & Conditions and Financial Services Guide for further information.

On the date of publishing this report (referred to on the Kalkine website), employees and/or associates of Kalkine do not hold interests in any of the securities or other financial products covered on the Kalkine website.