Company Overview: AJ Lucas Group Limited (ASX: AJL) is a specialist service provider to the energy, mining, and infrastructure sector companies. This Report covers the Price Action, Technical Indicators Analysis along with the Support Levels, Target Prices, and Recommendation on this one stock.

Recent Update:

AJ Lucas Group Limited reported revenues of AUD 36.2mn in the third quarter ending 31 March 2023. Revenue for the nine months through 31 March 2023 of AUD 118.9mn was 96.5% of the whole year revenue reported for FY22. Its Australian operations EBITDA for the nine months to 31 March 2023 was AUD 21.3mn, more than the EBITDA of AUD 19.1mn reported for the full year ending 20 June 2022. Meanwhile, Group EBITDA of AUD 20.1mn for the nine months through 31 March 2023 stood at AUD 20.1mn, higher than the EBITDA of AUD 18mn reported for FY22. The company said its Australian operations witnessed a heightened level of tender activity in its key markets of large diameter and directional drilling for the metallurgical coal industry. Lucas Drilling is participating in several tenders that could provide growth and customer diversification.

On 21 April 2023, AJL also refinanced its major debt facilities broadly on similar terms for a further two years.

AJL’s Technical Analysis:

On the daily chart, AJL’s prices are consolidating above a downward sloping trendline and continuously taking support from the same trend line, indicating the possibility of an upside reversal hereon. Moreover, the RSI (14-period) is forming a positive divergence compared to price action, supporting the positive bias. However, the 21-period and 50-period SMAs are above the current market prices (CMP) and may act as the dynamic resistance levels for the stock.

Daily Technical Chart – AJL

Considering the stock's current price action, support from a downward sloping trend line, positive divergence, and recent fundamental update, a 'Speculative Buy' rating has been given on this stock. The stock was analysed at the current market price of AUD 0.012 per share on 03 July 2023 at 01:47 AM, Sydney, Australia GMT +10, down by 3.85%. AJ Lucas Group Limited (ASX: AJL) was last covered in a report dated '25 November 2022'.

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is neither an Indicator nor a guarantee of future performance.

Note 2: Investment decision should be made depending on an individual’s appetite for upside potential, risks, and any previous holdings. This recommendation is purely based on technical analysis, and fundamental analysis has not been considered in this report.

Note 3: Related Risks: This report may be looked at from high-risk perspective and recommendations are provided are for a short duration. Recommendations provided in this report are solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc.

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.

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

The Green colour line reflects the 21-period moving average. SMA helps to identify existing price trends. If the prices are trading above the 21-period, prices are currently in a bullish trend (Vice – Versa).

The Red colour line reflects the 50-period moving average. SMA helps to identify existing price trends. If the prices are trading above the 50-period, prices are currently in a bullish trend (Vice – Versa).

The Orange/ Yellow colour line represents the Trendline.

The Black 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.

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