IOUpay Limited (ASX: IOU)

Incorporated in 2000, IOU provides financial technology and digital commerce software solutions. By using mobile technology, it caters services like mobile banking, digital services and digital payments to the banks in Malaysia, and telecommunications and corporates in Malaysia and Indonesia. It also functions with telecommunication network providers in order to provide mobile over-the-top (OTT) services. Its market capitalization stood at AUD 165.42 million as of 20^th January 2022.

Operational Updates: On 14^th January 2022, IOU received a government approval from Malaysian Ministry of Housing and Local Government to complete the transfer of shares related to Sibu Kurnia Marine Sdn Bhd acquisition. On 21^st December 2021, it was updated that the company is expected to hold its AGM on 27^th January 2022. As per the 1^st December 2021 update, the company has recently satisfied the conditions pertaining to first tranche of third-party consent from “I-Destinasi Sdn Bhd (IDSB) - one of its banking partners. The balance of ~RM 63 million (50% of the investment) of Second Tranche is due within the next six months.

Financial Topline & Bottomline: For its FY21, IOU recorded a total revenue of ~AUD 7.19 million along with a total loss of ~AUD 4.79 million. It closed its accounts at the end of 30^th September 2021 (1QFY22) with a cash balance of ~AUD 39.52 million versus ~AUD 51.41 million at the end of 30^th June 2021.

Technical Analysis:  IOU prices witnessed good recovery from lower levels in the past two weeks. However, prices are now taking resistance of the upward sloping trend line that indicates profit booking is eminent in the stock. RSI (14-period) has shot up to extreme overbought region at ~78.87 on a daily chart that also attract profit booking from the resistance levels. Immediate support level is ~AUD 0.245 while immediate resistance level is ~AUD 0.325.

Stock Recommendation: Over the past six months, the stock has provided a positive return of ~14.89% and over last one month it has given ~68.75% return, Currently, it is trading lower than the average 52-week price level band of AUD 0.150 and AUD 0.850. Since the stock is facing a stiff resistance and considering its overbought zone RSI along with the return it has provided to the shareholders, it is prudent to ‘Sell’ the stock at the current market price of AUD 0.293 per share, as of 20^th January 2022, 10:50 AM (GMT+10), Sydney, Eastern Australia.

Daily Technical Chart – IOU

Source: REFINITIV

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. 

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

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

The Yellow colour line represents the Trendline.

The Purple 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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