4DS Memory Limited

4DS Details

4DS Memory Limited (ASX: 4DS) is focused on non-volatile Interface Switching ReRAM for high-density high-volume Storage Class Memory. It owns 30 US-granted patents and an additional 2 patent applications waited for its in-house developed intellectual property.

H1FY21 Performance – For the First Half Ended 31 December 2020 

For the first half ended 31 December 2020, revenue decreased by 3.9% YoY to $29.4K. In line with this, corporate and administrative expenses fell by 33.5% YoY to $84.5k. For the period between August 2020 and December 2020, it received 24th, 25th, 26th, 27th, 28th, and 29th USA patents. These patents particularly relate to the operation of the company’s fully-owned Interface Switching ReRAM technology. On 10 December 2020, the company stated that Second Non-Platform Lot wafers were positively manufactured by imec. Meanwhile, the company reported a net loss of $3.1 million, up 6.6% YoY.

Financial Snapshot (Source: Company Reports) 

Recent Update:

Receives Imec Wafers: As per the release dated 21 June 2021, the company received two sets of wafers from imec. As stated earlier, imec were finalizing the production of the Second Platform Lot and now have received approvals for eighteen (18) wafers at its Fremont facilities.

Outlook:

As per the March 2021 quarter trading update, 4DS posted positive results from the second non-platform lot and initiated production of the same, which remains on schedule. This was expected late in Q2 2021. Further, it finalized the 2021 collaboration agreement with imec and increased its owned patent portfolio to 30 granted patents. As of 31 March 2021, the company had cash of $5.5 million, compared with $6.5 million as of 31 December 2020. Further, it received $74k in cash during Q3FY21, which was related to the proceeds of the exercise of options.

Key Risks:

The company is exposed to financial risks that include market risk (including interest rate risk, price risk, and foreign currency risk), credit risk, and liquidity risk.

Technical Overview:

Chart:

4DS stock prices are facing strong resistance of the downward sloping trend line at 0.165 level on the daily chart and prices are sustaining below the trend line. Moreover, the stock is trading below its 21-period and 50-period SMA, indicating a bearish trend. Furthermore, the momentum oscillator RSI (14-Period) is trading at ~49.44 level, which supports the further downside move in the stock price.

Stock Recommendation

4DS has delivered 9-month and 1-year returns of ~+126.56% and ~+158.93%, respectively. It is currently trading below the average of the 52-week low price of $0.043 and the 52-week high price of $0.280. The company’s sales and receipts remained lower in Q3FY21 over pcp.  Further, the company is making net losses and facing high competition from established players.

Considering the aforesaid facts and current trading levels, we suggest investors to book profits. Hence, we give a “Sell” recommendation on the stock at the current market price of A$0.160 (Australian Time: 12:26 pm)  as of 21^st June 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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