Resonance Health Limited

RHT Details

Appointment of CMO: Resonance Health Limited (ASX: RHT) is engaged in the delivery & development of non-invasive medical imaging software and services. As per a recent update, the company has appointed Professor John Olynyk as its Chief Medical Officer (CMO). Mr. Olynyk is a leading figure in liver-related diseases including iron-metabolism disorders, hemochromatosis, liver injury, hepatocellular carcinoma, and non-alcoholic fatty liver disease.

Filing of Additional Provisional Patent Applications:

On 23 November 2021, the company has updated that it has filed two additional Australian provisional patent applications for the application of novel Antisense Oligonucleotides, for treating human diseases.

Quarter Ended 30 September 2021 Update:

• During the period, the company focused on driving future revenue growth through the development of global sales & marketing strategy.
• It has made key strategic recruitments during the period including General Manager - Global Sales & Marketing, and Chief Technology Officer.
• During the quarter, the company announced the development of a new AI medical device, LiverSmart that combines two existing regulatory-cleared Resonance Health AI products, FerriSmart and HepaFat-AI, into a single multi-parametric MRI session.
• It ended the period with a cash position of $8.38 million as of 30 September 2021.

Revenue Trend (Source: Analysis by Kalkine Group)

Key Risks: The company’s line of business makes it prone to stiff competition from peers in the same space. The company also faces restricted access to patients due to COVID-19 lockdowns, risk of failure of clinical trials, and customer concentration.

Outlook: The company’s underlying products & services business remains well-positioned to drive future growth. It should be aided by rising demand for clinical need worldwide for products and services to assist in the identification and management of blood disorder-related iron overload diseases and organ fat diseases.

Stock Recommendation: As per ASX, the stock of RHT is trading below its 52-weeks’ average levels of $0.080-$0.325. The stock of RHT gave a positive return of ~14.28% in the past one week. The stock has a support of $0.102 and resistance of $0.123. On a TTM basis, the stock of RHT is trading at a P/B multiple of 4.3x, higher than the industry median (Healthcare) of 3.7x, and thus seems overvalued. Considering the valuation on TTM basis, recent rally in the stock price, increase in cash cycle days and the inherent key risks associated with the business & sector, we suggest investors to book profits and give a ‘Sell’ rating on the stock at the closing market price of $0.12, up by ~9.090% as on November 24, 2021.

RHT Daily Technical Chart, Data 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 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.

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