National Tyre & Wheel Limited (ASX: NTD)

NTD provides automobile tires, wheels, tubes, off-road tires, catered to passenger vehicles, light commercial vehicles, caravans, and trailers. It serves worldwide customers. NTD was ASX listed on December 15, 2017.

Financial and Operational Updates: As announced on January 07, 2022, NTD acquired three businesses from Caters, namely, Caters Tyre Service Limited, C.O. Tire & Retreading Co Limited and Tyre Distributors New Zealand Limited.  The acquisition is expected to boost the tyre management system with a distribution network of over 40 stores. The deal is valued at $26.5 million cash consideration. The acquisition is funded through a $9 million capital raise through institutional placement and $3 million through a share purchase plan. On December 21, 2021, Ryan Young became a substantial holder with ~6.73 million shares bought, representing voting rights of 5.5%.

As per the 2021 AGM presentation, NTD showcased an EBITDA margin of 10.0% in FY21 as compared to 7.7% in PcP. It had reported an NPAT of $21.1 million as compared to $5.7 million in FY20. It had closed the period with net debt of $16 million as compared to net cash of 13.6 million.

Technical Analysis: On the daily chart, NTD prices are hovering near the rising trend line resistance zone and facing the resistance of the same. Moreover, the momentum oscillator RSI (14-period) was trading at ~66 level and formed a negative divergence, indicating the possibility of a correction in the price. However, the prices are trading above the trend-following indicators 21-period and 50- period SMA, which may act as a support level for the stock. An important support level for the stock, is placed at AUD 1.46, while the key resistance level is placed at AUD 1.75.

As the stock currently trades at higher levels, ambiguities on the recent acquisition, increasing debt levels, investing in this stock at such uncertain levels should be taken with a calculated approach, hence a ‘Watch’ stance is suggested. The stock was analyzed as per the closing price of AUD 1.585 per share as of 20^th January 2022.

Daily Technical Chart – NDT

Source: REFINITIV

Note:  The purple color line in the chart depicts RSI (14-period), while the green color line shows 50-Period SMA.

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. 

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 unless those persons comply with certain safeguards, procedures, and disclosures.

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.