QX Resources Limited (ASX: QXR)

QX Resources Limited is involved in exploring and exploiting mineral properties in Queensland and Western Australia. The company was listed on ASX in February 2011. The company has a market capitalisation of AUD 26.45 million as of February 3, 2022.

Financial & Operational Update: On 1 February 2022, QXR reported promising rock chip geochemical results during the early field inspection on the Turner River lithium project. The company recently exercised its option to purchase this project from Redstone Metals Pty Ltd (“Redstone”) by the issue to Redstone of 12 million fully paid shares QXR. The company has planned a follow-up field exploration for Q1FY22.

For the December quarter of 2021, QXR completed its trenching program at the Disney tenement combining the Big Red and Red Dog prospects. The company also acquired the Western Shaw lithium project, situated in the Pilbara region of Western Australia. The buyout adds to the growing portfolio of QXR’s high-quality exploration and project development lithium assets. The company ended the quarter with a cash balance of ~$900k and liquid investments of ~$300k, thus remaining well-funded to undertake exploration across its project portfolio. Net cash outflow from operating activities during the quarter stood at $111k. Notably, it incurred $169,000 exploration expenditure during the December quarter.

Technical Analysis: QXR price witnessed significant rally since the price broke its upward sloping trend line resistance level of AUD 0.38 last month. Now, the stock prices took small correction from higher levels and taking support of the same upward sloping trend line and its 21-period SMA with no volume support that further indicates that the existing correction is temporary, and the prices might again pick the bullish momentum in the coming period. RSI (14-period) is trading at ~52.37 level that further confirms that the stock is still has upside momentum. Immediate support levels are AUD 0.034 and AUD 0.029 while immediate resistance levels are AUD 0.048 and AUD 0.053.

While incorporating the support and resistance in analysing the investment opportunity, the investors with a high-risk appetite might consider a ‘Speculative Buy’ position on this scrip after glancing over its recent quarter activities updates, adequate liquidity, and technical analysis. The stock was analysed as per the closing price of AUD 0.037, down by ~5.129%, as of 3^rd February 2022. However, the risk levels are extremely high considering the actual results, mounting losses and funding risks.

Daily Technical Chart – QXR

Source: REFINITIV

Netlinkz Limited (ASX: NET)

NET provides a cloud-based networking solution. The company’s VSN solution is a ‘Network as a Services’ (NaaS) catered to enterprises of all sizes. NET enables secured and personalised connections for users regardless of their locations. The company has a market capitalisation of AUD 48.94 million as of February 3, 2022.

Financial and Operational Updates: On January 27, 2022, NET announced that Regal Funds Management Pty Ltd, a substantial shareholder of the company, has reduced its voting power from 7.51% to 6.23%.

The company’s overall revenues went up 43% QoQ and 22% year over year to $5.2 million in Q2FY22. For 1HFY22, NET’s total revenues went up 2% year over year. Notably, excluding low margin hardware sales prior, revenues increased 25% year over year in 1HFY22. During Q2FY22, a number of enterprise clients stood at 102, up from 43 reported in Q2FY21. The company has unveiled VSN 2.2 in Australia, MENA, and Europe, resulting in a significant increase in recurring revenue. Cash receipts increased to $5.4 million, up 14% and 4%, on a QoQ and YoY basis, respectively. NET posted operating cash outflows of $1.65 million in Q2FY22.NET generated $0.3 million cash in Q2FY22 due to options' exercise during the period. The company closed the period with a cash balance of $7.3 million.  For Q3FY22, overheads are projected to be $1.9 million per quarter compared with $2.6 million in Q3FY 2021.

Technical Analysis: NET price continues to trade in a primary bearish trend with good volumes that further indicates that bears are active in the stock. Prices are trading below its 21-period and 50-period SMA on a daily chart that also indicates bearishness in the stock prices. RSI (14-period) is hovering at ~40 level that indicates the stock is trading in a bearish momentum. Immediate support levels are AUD 0.0125 and AUD 0.011 while immediate resistance level is AUD 0.020 and AUD 0.0237.

Given the global uncertainties, mounting losses, declining cash balance, stiff competition, negative cash outflow from operations, and the current technical levels, investing in this stock at such uncertain levels should be taken with a calculated approach, hence a ‘Watch’ stance is suggested. The stock was analysed as per the closing price of AUD 0.015 per share, as of 3 February 2022.

Daily Technical Chart – NET

Source: REFINITIV

Note: QX Resources Limited (Company) is a client of Kalkine Media Pty Ltd (Kalkine Media), an affiliate of Kalkine. However, under no circumstances have Kalkine or its related entities been, directly or indirectly influenced in making any related insights concerning Company as contained in this report, and no form of compensation is or will be received by Kalkine, Kalkine Media or Kalkine’s other related entities for the publication of this report.

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.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices

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 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.

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