Altech Chemicals Ltd (ASX: ATC)

ATC is involved in the establishment of a research and development laboratory in Australia as a dedicated facility for the further development of its methods for the alumina coating of graphite and silicon particle. The company is also engaged in the completion of early works construction activities at its high purity alumina (HPA) plant site in Malaysia.

Financial and Operational Updates:

Recently, the company announced that it has finally “cracked the silicon barrier” and successfully produced and tested a series of lithium-ion battery anode materials, which have a retention capacity of ~30% higher than the conventional lithium-ion battery anode materials. This breakthrough follows almost 12 months of challenging work. The company believes that the phase 2 R&D would strive to obtain retention capacity beyond the current 30%. As announced on 18 November 2021, ATC has wrapped up green credentials assessment for a battery materials coating plant which is subject to a preliminary feasibility study (PFS). PFS is being finalised by Altech Industries Germany GmbH (AIG), a 75% owned subsidiary of Altech.

During the quarter ended 30 September 2021 (Q1FY22), the company appointed Martin Stein as its Chief Financial Officer (CFO), which became effective on 1 November 2021. The company discovered halloysite at its Kerrigan kaolin deposit in Western Australia, which was observed during the recent processing of samples from its 2020 air-core drilling campaign. ATC recorded net cash outflow from operating activities of ~$1.07 million, and cash & cash equivalents stood at ~$3.88 million. Looking forward, ATC is committed and focused on finalising finance for its high purity alumina (HPA) plant in Johor, Malaysia. The company is exposed to a risk arising from the change in climate, which could pose a temporary restriction on its operations.

Stock Recommendation: In the past three and six months, the stock of ATC has provided returns of 163.39% and 189.21%. The stock is trading at par to its 52-week high levels of $0.150. On a daily chart, the stock is trading at an RSI level of 71.09, which indicates that the stock is currently under an overbought zone and might witness some correction going forward. Hence, considering the solid rally in stock price in past months, current trading levels, RSI 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 $0.150, as on 25 November 2021, 11:29 AM (GMT+10), Sydney, Eastern Australia.

Daily Technical Chart – ATC

Source: REFINITIV

Note, the purple color at the bottom of the chart denotes RSI (14-day period).

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.

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