Rhinomed Limited

RNO Details

Rhinomed Limited (ASX: RNO) is engaged in the research, development, and commercialisation of consumer and medical devices. The market capitalisation of the company as on 14 July 2021 stood at ~$43.14 million.

Q3FY21 Update:

Despite the ongoing impact of the pandemic on global foot traffic over the period, revenue in the third quarter period stood at $1.006 million, an increase of 29% on prior period. In the three months ending March 2021, the company shipped 64,306 units to customers, representing a 5% increase on prior quarter.

(Source: Company Reports)

Result Performance (Half-Year Ended 31 December 2020 – H1FY21):

Revenue of the company from the ordinary activities stood at $1.95 million, an increase of 16.7% on previous corresponding period (pcp). Loss from the ordinary activities after tax attributable to the owners of RNO was reported at $5.49 million, an increase of 3.5% on pcp. Net tangible assets per ordinary security for the period stood at 2.05 cents as compared to 3.16 cents in the pcp. No dividends were declared during the period.

(Source: Company Reports)

Outlook:

The company has witnessed momentum in sales in the first half of FY21 and will continue to work closely with its retail partners for the supply of its product suite. It plans to increase distribution amongst its existing key accounts in the markets of the US, the UK and Australia. RNO also plans to leverage its intellectual property platform for the creation of high-value products and solutions.

Key Risks:

The company operates in a sector where there is a constant need for funding for expanding sales reach and network. It is faced with the risk of finding suitable investors in order to carry out the smooth functioning of its operations.

Stock Recommendation:

RNO’s share showed a return of ~20.00% and ~146.57% in six months and one year period, respectively. Its 52-week low and high price stood at $0.071 and $0.190, respectively. On a TTM basis, the stock of RNO is trading at an EV/Sales multiple of 9.0x compared to the Industry Median of 11.3x (Healthcare Equipment & Supplies). Considering the widening of losses, negative ROE, the technical levels, we give a “Sell” recommendation on the stock at the closing price of $0.180, up by ~5.882% as on July 14, 2021.

Technical Overview:

On the daily chart, RNO stock prices are continuously trading below the horizontal trend line resistance level of AUD 0.19. Moreover, the momentum oscillator RSI (14-period) is trading at ~65.87 levels and formed a negative divergence, indicating a possibility of downside correction from the current level. However, the price is trading above its 21-period simple moving average on the chart, which act as a support level for the stock. An important support level for the stock, is placed at AUD 0.154 while, key resistance level is placed at AUD 0.191.

RNO Daily Technical Chart, Data Source: REFINITIV 

Note: The purple color line represents RSI (14-period). The green color line indicates 12-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 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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