Pearl Global Limited (ASX: PG1) is a tire processing company, which is focused on its thermal desorption technology to convert tires into valuable secondary products.

Recent News: On 24^th August 2022, Mr Brad Mytton resigned from the designation of Director of PG1.

Fundamental Analysis: Recently, PG1 released its Full FY22 Financial Statements on 24^th August 2022. Though, the company reported a ~32.5% upside (Y-o-Y) in its revenue to AUD 2.865mn, however its net losses also increased from AUD 7.745mn in FY21 to AUD 10.069mn in FY22, a ~30.0% increase on pcp basis.

Technical Commentary: On the daily chart, PG1 stock prices are trading at higher levels around the resistance zone, indicating a possible downward move hereon. Moreover, the momentum oscillator RSI (14-period) is moving in an overbought zone and showing a reading of ~82.643, indicating stock may reverse from upper levels.

PG1’s Daily Chart

PG1 Daily Technical Chart, Data Source: REFINITIV

On a TTM basis, the stock of PG1 is trading at an EV/Sales multiple of 16.1x as compared to the industry (Industrials) average of 10.5x, and thus seems overvalued. Considering the recent director’s resignation, increasing net losses in FY22 financial results, volatile price movements, and risks associated, it is prudent to exit the stock. Hence, a ‘Sell’ recommendation is given on the stock at the current price of AUD 0.026, 11:20 AM (GMT+10), Sydney, Eastern Australia, as of August 25, 2022.

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is August 25, 2022. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock.

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

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