Accent Group Limited (ASX: AX1)

AX1 is engaged in retailing and distribution of footwear, apparel, and accessories with 607 stores across 28 retail brands and own exclusive distribution rights for 18 international brands across Australia and New Zealand. AX1 has a market capitalization of AUD 1.35 billion as of 19^th October 2021 and is trading at the stock price of AUD 2.450 per share.

Financial and Operational Updates: As per the full-year results announced on August 18, 2021, AX1 had over 8.4 million customers and operated 31 websites for seamless online shopping. With sales reaching over $1.1 billion in FY21, the company enjoys a significant market share in the $6+ billion performance and lifestyle market in Australia and New Zealand. It had renewed its license agreement with Skechers to 2032. The lockdown and stay-at-home protocol persuaded digital shopping clocking growth of 48.5% over pcp. It plans to ramp up the StyleRunner segment with 20 stores targeted to open by early 2022, which includes new entry stores in New Zealand. The company plans to achieve 40% of sales from Glue from the current 20% through wholesale channel expansion and launch of new world-class store before this Christmas. EBITDA touted 19.3%, aided by margin expansion backed by vertical product strategy and cost efficiencies, and healthy topline growth. AX1 clocked NPAT growth of 38.6% to reach $76.9 million in FY21. It had closed the year with net debt of $67.04 million due to ramp-up with 90 stores and digital infrastructure spend. On May 31, 2021, AX1 completed the acquisition of the Glue Store retail business and the wholesale and distribution brands business of Next Athleisure Pty Ltd.  

Technical Analysis: AX1 prices have recovered from the lower levels after a sharp fall in prices in August 2021. Prices are now finding the resistance of the upward sloping trend line at AUD 2.56 level on a long-term chart that indicates profit booking might occur from the nearby resistance levels. Immediate support levels are AUD 2.30 and AUD 1.99, while immediate resistance levels are AUD 2.56 and AUD 2.85 levels.

Considering the decent returns in the past one year (~+37.25%), the recent rally in stock prices, technical levels, risk of changing customer preferences, store closures and lockdown related risks, we suggest investors to book profit on the stock and give a “Sell” recommendation on the closing price of AUD 2.450 per share, up by ~2.00% as of 19^th October 2021.

Daily Technical Chart – AX1

Source: REFINITIV

Norwest Minerals Limited (ASX: NWM)

NWM is based out of Western Australia, engaged in the production and exploration of gold, copper and base metals. It operates Bulgera gold, Bali Copper and Arunta West copper-gold projects in WA. It also holds Marriott nickel project and Marymia East gold-base metal project.

Financial & Operational Updates – During FY21, NWM raised nearly $2.5 million through the placement of 25 million shares at AUD 0.10 each. Funds were utilized for exploration activities at its Marymia East Gold project and to meet working capital requirements. In an update shared on 23^rd September 2021, NWM commenced the diamond drilling at its Bulgera Gold project. The 10-hole drilling will test high-grade gold lode at about 400 and 700 metres depth. On 10^th September 2021, NWM appointed Mr Sia to the board, holding versatility as a geologist with 40 years of exploration experience in various projects in Malaysia. No dividends were declared, and no recommendation is made for future dividends as well. The company is yet to generate core mining revenues. It had incurred a loss of $1.69 million in FY21 as compared to the loss of $1.25 million in pcp. Proceeds from private placement boosted its cash balance reaching $1.09 million as of June 30, 2021. It had incurred accumulated losses. Nevertheless, equity appears to be strong at $12.46 million.

Technical Analysis: NWM prices are trading in a falling wedge pattern on a monthly chart. Prices got the support of the lower band of the falling wedge pattern and recovered from the lower levels. Stock is now facing resistance of the upward sloping trend line and trading near to the upper band of the falling wedge pattern that further giving indication that the prices might correct to downside from the current levels. Immediate support levels are AUD 0.072 and AUD 0.063 while Immediate resistance levels are AUD 0.090 and AUD 0.096.

Due to huge accumulated losses, nil operating revenues, and increasing exploration related expenditure, technical levels, we suggest investors to book profit and give “Sell” recommendation on the stock at the current market price of AUD 0.088 per share as of 19^th October 2021, 1.25 PM (GMT+10), Sydney, Eastern Australia.

Daily Technical Chart – NWM

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 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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