Holista Colltech Limited

HCT Details

Holista Colltech Limited (ASX: HCT) is a biotechnology company and is engaged in the distribution of natural health supplements. The market capitalization of the company as on 3 August 2021, stood at ~$17.62 million.

Q2FY21 Update:

• Improvement in Cash Balance: During the period, the company’s Cash and cash equivalent holdings at the end of the quarter was $2.1 million. Plus, it has access to a further $449,000 in unused debt facilities. The increase in cash position can be attributed to growth in sales, favorable exchange rates and the switch to lower interest-bearing debt.
• Healthy Food Ingredients Business Reported Highest Growth: The company reported growth across most of its divisions in the second quarter as compared to previous corresponding period (pcp). Customer receipts stood at $1.8 million, an increase of 36% on pcp.
• Healthy Food Ingredients business reported the biggest percentage revenue growth among Holista’s four divisions of 411% during the quarter.
• Sales from its Infection Control division stood at $171,000, as compared to $7,000 in the previous quarter.

Key Data (Source: Company Reports) 

Result Performance (Year Ended 31 December 2020 – FY20)

• Marginal Decline in Revenue: Despite impact of the COVID-19 global crisis, full-year revenue marginally declined from $7.26 million in FY19 to $7.10 million in FY20. Strong sales growth in Healthy Food Ingredients and Infection Control Solutions offset weakness in other parts of the business affected by Covid-19.
• Increase in Expense Led to Net Loss: The adjusted pre-tax net loss for the period stood at $2.3 million, while statutory loss before tax came in at $5.6 million. This loss can be attributed to an increase in expenses and the change in the sales mix between Holista’s various businesses.
  

Outlook:

The company expects the growth momentum to continue in 2021. It expects the improved performance of iGalen to aid decent result for the company’s Infection Control Solutions business over the coming quarters. HCT will also plans to launch its nasal balm and M3 industrial solution going forward.

Key Risks:

The company’s products and processes are prone to prudent regulatory purview. Hence, this might have an impact on the top-line and bottom-line of HCT. 

Technical Analysis

Weekly Chart

Source: REFINITIV

Note: The black color line in the chart depicts RSI (14-period), while the orange color line represents the trend line. The green and red color lines show 21-Period SMA and 50-Period SMA respectively, while blue color histograms at the bottom of charts represent weekly volumes.

HCT's prices are consolidating on lower levels and facing stiff resistance from a downward sloping trend line, indicating the possibility of a downside correction. On the weekly chart, prices recently moved above 21-period SMA; however, still trading below 50-period SMA, acts as an immediate resistance level. The leading indicator RSI (14-period) is trading near the midpoint at ~52.48 levels. Now an immediate resistance level for the stock appears at AU$0.082 while support is at AU$0.055 level.

Stock Recommendation:

The company’s EBITDA Margin and Net Margin for FY20 stood at -27.5% and -79.7%, as compared to FY19 result of -12.2% and -12.4%, respectively. Its ROE for FY20 stood at -111.4%, as compared to -14.1% in FY19.

Moreover, HCT’s share is on downtrend, therefore, it is advisable for investors to liquidate at the current levels.

Hence, we give a “Sell” recommendation on the stock at the current market price of $0.066 per share, up 3.125% as on 3^rd August 2021.

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 on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the analysis has been achieved and subject to the factors discussed above alongside support levels provided.

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.

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