IDT Australia Limited

H1FY22 Key Financials ending 31^st December 2021: IDT Australia Limited (ASX: IDT) is an Australian company which supplies products, research, and development in the pharmaceutical space, which also includes medical cannabis.

• Top & Bottom line: IDT increased its revenue by ~74% to $8.55 million, with an ~8% uptick in its NPAT on PcP basis to $1.21 million.
• MMI Grant Results: After facing a setback from Manufacturing Collaboration Stream Grant under the government’s modern manufacturing initiative (MMI), the company is still trying to initiate other alternative strategic options, including application for Round 2 of the MMI translation stream.

Cash Balance; Analysis by Kalkine Group

Key Risks and Challenges

The business is susceptible to a highly complex regulatory environment, failure which can lead the business to fulfil fines and penalties. Health and pharmaceutical companies operate in an uncertain environment, prolonged by years undertaken in clinical trials.

Outlook

IDT secured a sterile manufacturing license from the Therapeutic Goods Administration to be used for manufacturing Australia’s First cGMP mRNA Drug; clinical trials are expected in CY22. The company continues to execute its Medicinal Cannabis Manufacturing Plans for expanding stability data for oil-in-bottle and flower-in-bottle products.

Stock Recommendation: The stock of IDT gave a negative return of ~58.97% in the past year. The stock is currently trading near its 52-weeks low level of $0.155. On a TTM basis, IDT has an EV/Sales Value multiple of 2.1x compared to the industry median (Healthcare) of 9x, thus seems undervalued. After considering a decent uptick in operating cash flow, current trading levels, IDT’s positive margins and ROE, sterile manufacturing licence, undervaluation indicated by TTM valuation, and key risks associated with the business, we give a “Speculative Buy” recommendation on the stock at the closing market price of $0.160, down by ~3.030%, as of 26 April 2022.

IDT 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 depend on the investors’ appetite for upside potential, risks, holding duration, and previous holdings. Investors can consider exiting the stock if the Target Price mentioned as per the Valuation has been achieved and is subject to the factors discussed above.

Technical Indicators Defined: -

Support: A level where-in the 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 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.

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 and its related entities do not hold interests in any of the securities or other financial products covered on the Kalkine website unless those persons comply with certain safeguards, procedures, and disclosures.

Kalkine Media Pty Ltd, an affiliate of Kalkine Pty Ltd, may have received, or be entitled to receive, financial consideration in connection with providing information about certain entity(s) covered on its website.