IDT Australia Limited (ASX: IDT)

The company is engaged in the supply of products and provisioning of research and development and other technical services within the pharmaceutical and allied industries.

Financial and Operational Updates: Recently, the company notified that it has successfully manufactured the mRNA Drug Product for which it has inked Master Services Agreement and Services Order with Monash Institute of Pharmaceutical Sciences (MIPS), announced on 13 October 2021. IDT added that the drug product has met all specifications and is now under the release process to be supplied to MIPS for use in their upcoming clinical trial. For FY21, IDT posted a rise of $2.8 million in total revenue to $16.9 million (which includes $0.9 million of Job Keeper receipts). As a result of the rising revenue and stronger controls in procurement and manufacturing, IDT recorded a growth of 209.6% in reported net profit after tax to $2.10 million. The company’s business is exposed to various material business risks, which primarily include stiff competition, failure in clinical trials, regulatory risk, etc. Looking forward, the company would continue to engage with the Government and industry to promote increased levels of sovereign vaccine and pharmaceutical manufacturing in Australia.

Stock Recommendation: Recently, we have covered this stock as a “Speculative Buy” recommendation with a resistance level of $0.500, and the stock has met the level. In addition, the stock has provided returns of ~71.64% in the past six months. The stock of IDT is trading above its 52-weeks’ low-high average of $0.165 - $0.755, respectively. The stock is trading at a price-to-book value multiple of 3.8x, compared to the industry median (Healthcare) of 3.6x on a TTM basis, which indicates the stock is overvalued at the current trading levels. On a daily chart, the stock is trading at an RSI level of 71.44, which indicates that the stock is in the overbought zone and may witness some correction, going forward. The stock has support and resistance level of $0.500 and $0.755, respectively. Considering the robust rally in the past months, RSI Level, valuation on TTM basis, current trading level, and key risks associated with the business, we suggest investors to book profit and give a ‘Sell’ rating on the stock at the current market price of $0.675, as on 30 November 2021, 11:20 AM (GMT+10), Sydney, Eastern Australia.

IDT Daily Technical Chart, Data Source: REFINITIV 

Note: The purple line at the bottom of the chart reflects the RSI (14-day period)

Note 1: The reference data in this report has been partly sourced from REFINITIV.  

Note 2: Investment decision should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings.

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