Rhinomed Limited

RNO Details

R&D Tax Incentive Refund: 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 26 April 2021 stood at ~$29.18 million. As per a recent update, the company has announced that it has received $185,124.98 through the R&D tax incentive refund with respect to the FY20 income tax year.

Change of Director’s Interest: The company has announced that its Director, Michael Johnson, has undergone a change of interest in the company and has acquired 12,690,456 options in the company on 15 March 2021.

H1FY21 Results Update: The company has reported an uptick in the operating revenue by 16.7% to $1.95 million when compared to the pcp. Total units shipped during the period stood at 145,576. It ended the period with cash reserves of $5.4 million as of 31 December 2020.

Quarterly Revenue Performance (Source: Company Reports)

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.

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. It also plans to leverage its intellectual property platform for the creation of high-value products and solutions.

Stock Recommendation: The company has reported that the majority of its account receivables balance of $1.1 million is being held with its premium pharmacy accounts. The stock of RNO is trading slightly below its average 52-weeks’ levels of $0.069-$0.190. The stock of RNO gave a positive return of ~59.72% in the past nine months and a negative return of ~7.99% in the past one month. On a technical analysis front, the stock of RNO has a support level of ~$0.099 and a resistance level of ~$0.141. On a TTM basis, the stock of RNO is trading at an EV/Sales multiple of 6.6x, lower than the industry median (Healthcare) of 14.5x. Considering the current trading levels, valuation on TTM basis, improvement in the financial performance, increase in gross margins and the key risks associated with the business, we recommend a ‘Speculative Buy’ rating on the stock at the current market price of $0.115 as on April 26, 2021.

RNO Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

Note: Investment decision 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 Valuation has been achieved and subject to the factors discussed above.

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