IDT Australia Limited

IDT Details

This report is an updated version of the report published on the 13th April 2022 at 3:55 PM (GMT+10).

Change in Substantial Shareholding: IDT Australia Limited (ASX: IDT) is supplies products, research, and development in the pharmaceutical space, and also includes medical cannabis. Recently, IDT informed the market that Sandon Capital Pty Ltd, a substantial holder of the company increased its voting power from ~11.2% to ~12.2%.

Business Updates & H1FY22 Key Financial:

• MMI Grant Outcome: IDT faced an unsuccessful outcome for Manufacturing Collaboration Stream Grant under the government’s modern manufacturing initiative (MMI). However, the company stays put in progressing several alternative strategic options, like application for Round 2 of the MMI translation stream. The grant is required for the project, which will be Australia’s first locally manufactured cGMP mRNA finished product. It makes IDT- the only company with demonstrated capability, in Australia.
• Financial Position: IDT closed its haly-yearly accounts with a cash balance of $13.31 million as of 31 December 2021. Net cash inflow stood at $6.39 million for the same period, versus inflow of $0.46 million in H1FY21.

Key Metrics; Analysis by Kalkine Group

Key Risks and Challenges

The business is susceptible to a highly complex regulatory environment, failure to 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, which enables IDT’s cGMP sterile manufacturing facility a headsup. It will be manufacturing Australia’s First cGMP mRNA Drug, expected for the clinical trials in CY22. It will Australia’s first locally manufactured cGMP mRNA finished product and will make IDT- the only company with demonstrated capability, in Australia.

Stock Recommendation: The stock of IDT gave a negative return of ~39.65% in the past year. The stock is currently trading lower than the 52-weeks average price level band of $0.162 - $0.755. On a TTM basis, IDT has an EV/Sales multiple of 2.1x compared to the industry median (Healthcare) of 9.0x, thus seems undervalued. After considering IDT’s proisitve margins and ROE, the considerable decent uptick in operating cash flow, current trading levels, 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 current market price of $0.170, 10:00 AM (GMT+10), Sydney, Eastern Australia as of 13^th April 2022.

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

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 from 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 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.