Codan Limited

CDA Details

Quarterly Rebalancing: Codan Limited (ASX: CDA) is engaged in designing, manufacturing, and marketing several high value-added electronics products. As per the recent quarterly rebalancing of S&P/ASX Indices, CDA will be removed from the S&P/ASX 200 Index, which would be effective from the opening of the trading session on 20 June 2022.

Market Update: The below picture provides an overview of the market update:

Market Update (Source: Analysis by Kalkine Group)

Key Risks: The company is exposed to risks arising from the extreme change in technology, rising market share of peers, and regulatory uncertainties as it has direct exposure to defence products.

Outlook: The company expects to achieve record profits in FY22 by matching 1HFY22 profits of $50 million in 2HFY22. Looking forward, CDA’s growth strategy revolves around bringing world-leading technology to its customers, cementing core business via diversification, and focusing on acquisition opportunities.

Valuation Methodology: P/E Multiple Based Relative Valuation (Illustrative)

Source: Analysis by Kalkine Group

*% Premium/(Discount) is based on our assessment of the company’s NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

Stock Recommendation: The stock of CDA is trading below its 52-week low-high average of $6.270 - $19.410, respectively. The stock has been corrected by ~29.25% in the past six months. The stock has been valued using a P/E multiple-based illustrative relative valuation and arrived at a target price of low double-digit upside (in % terms). The company can trade at a slight discount to its peers, considering the higher debt to equity ratio and lower liquidity. For valuation, peers such as Dicker Data Ltd (ASX: DDR), Elsight Ltd (ASX: ELS), and Ava Risk Group Ltd (ASX: AVA) have been considered. Considering the expected upside in valuation, rising sales, the inflow of cash, optimistic outlook, current trading levels and key risks associated with the business, we recommend a ‘Speculative Buy’ rating on the stock at the closing market price of $7.140, up by ~0.421% as of 08 June 2022.

Markets are trading in a highly volatile zone currently due to certain macroeconomic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

CDA Daily Technical Chart, Data Source: REFINITIV  

Dotz Nano Limited

DTZ Details

Insights of Q1FY22: Dotz Nano Limited (ASX: DTZ) is involved in the development, manufacturing and commercialisation of graphene quantum dots. The below picture showcases a summary of progress in Q1FY22:

Q1FY22 Summary (Source: Analysis by Kalkine Group)

Key Risks: The company’s operational and financial performance could be affected by not fulfilling purchase orders, which could impact its topline. In addition, DTZ is exposed to a risk arising from the shift in new technology within the industry.

Outlook: For FY22 and FY23, the company would shift its focus on product, commercialization and sales, which would mainly be supported by advanced negotiations currently underway with multiple potential customers. In addition, it would focus on adapting the diagnostics platform to other viruses and applications.

Stock Recommendation: The stock of DTZ is trading near its 52-week low level of $0.270, offering a decent opportunity for the accumulation. The stock has been corrected by ~23.80% in the past six months. The stock is trading at a P/BV multiple of 24.7x as compared to the industry average (Technology) of 41.8x on a TTM basis. Thus, it can be said that the stock is undervalued at the current trading levels. Considering the valuation on a TTM basis, decent performance in Q1FY22, encouraging outlook, current trading levels, and key risks associated with the business, we recommend a ‘Speculative Buy’ rating on the stock at the closing market price of $0.315, down by ~4.545% as on 08 June 2022.

Markets are trading in a highly volatile zone currently due to certain macroeconomic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

DTZ Daily Technical Chart, Data 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 analysis has been achieved and subject to the factors discussed above alongside support levels provided.

Technical Indicators Defined: -

Support: A level where-in stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest.

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