Auscann Group Holdings Limited (ASX: AC8)

It is an Australian company engaged in the business of cultivating, manufacturing as well as supplying medical cannabis products. Its market capitalization stood at AUD 44.05 million as of 28^th October 2021.

Operational and Financial Updates:  On 28^th October 2021 as per the Quarterly Cashflow and Market Updates, AC8 reported a decrease in receipts from customers from ~AUD 17 million in June Quarter FY21 to ~AUD 6 million in September Quarter FY22 and reported ~AUD 12.5 million as net cash as of 30^th September 2021. On 13^th October 2021, it completed its’ 90-Target Animal Safety Study (TAS) for DermaCann® in the U.S, confirming the product to be safe and tolerated by the dogs.

As per the recent Annual Report, sales of the company stood at ~AUD 0.84 million in FY21 versus ~AUD 3.20k last year. The company’s Net Loss increased and stood at ~AUD 8.64 million, as compared to ~AUD 7.07 million in the previous year.

Technical Analysis: On a daily chart, AC8 stock price is sustaining below the horizontal trend line resistance level at AUD 0.115 and facing the resistance of the same. However, the prices are trading above the trend-following indicators 21-period SMA and 50-period SMA, which may act as a support levels. The momentum oscillator RSI (14-period) is trading at ~62.20 levels.

The stock has given ~12.36% return in the past one month while remained almost flat in the past three months. After considering its reduction in cash receipts Q-o-Q, stock’s inability to sustain above the given resistance point, and associated risks, we consider it is prudent to liquidate the stock. Hence, we recommend a “Sell” stance at the current price of AUD 0.105 per share, as on 01:24 PM (GMT+10), Sydney, Eastern Australia, as of 28^th October 2021.  

 Daily Technical Chart – AC8

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 Valuation has been achieved and 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 the uptrend may take a pause due to profit booking or selling interest. 

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. A reading of 70 or above suggests overbought status while a reading of 30 or below suggests an oversold status.

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.

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.