Harvest Technology Group Limited

HTG Details

FY21 Performance Update: Harvest Technology Group Limited (ASX: HTG) is a technology & communications company that delivers real-time remote control, communication, automation, and monitoring capabilities for the energy, resources, and renewables sectors.

• In FY21, the company reported total revenues (including other income) of $8.515 million, compared to $11.76 million in the prior year. The drop was largely due to COVID-19 implications on offshore operations.
• Loss during the year stood at $10.23 million, compared to a loss of $6.14 million in FY20.
• It ended the period with a cash balance of $6.75 million as of 30 June 2021.

Revenue Trend (excluding other income) (Source: Analysis by Kalkine Group)

Key Risks: The company is prone to the impacts of the COVID-19 pandemic on its operations, and the uncertainty still prevails.

Outlook: The company seems to be well-positioned with products and resources to undertake its Phase 2 of its Strategic Plan. Moving ahead, it will also focus on the US market with the acquisition of U.S.-based software-as-a-service (SaaS) company SnapSupport Inc.

Stock Recommendation

The stock of HTG gave a negative return of ~22.58% in the past six months. The stock is currently trading lower than the 52-weeks’ average price level band of $0.210 - $0.500. On a TTM basis, the stock of HTG is trading at a price-to-book value multiple of 7.4x, lower than the industry average (Technology) of 8.6x, signalling undervaluation. Considering the current trading level, valuation on TTM basis, successful completion of Phase 1 Strategic Plan, optimistic outlook, successful capital raise and key business risks, we give a “ Speculative Buy” recommendation on the stock at the current market price of $0.225, as of 30 November 2021, 10:31 AM (GMT+10), Sydney, Eastern Australia.

HTG Daily Technical Chart, Data Source: REFINITIV 

Adveritas Limited

AV1 Details

AGM Update: Adveritas Limited (ASX: AV1) is a software company and is engaged in the development and commercialisation of its product, TrafficGuard, which is used for funnel measurement, verification, and fraud prevention solution for digital advertising. The company has recently held its AGM on 23 November 2021, where the management has reported an improvement in its key sales metrics.

• The Group highlighted that it had close to 180 paying customers by 30 June 2021, and annualised revenue of over ~$1 million.
• It reported significant client wins in FY21, which have solidified its presence in high-value industry sectors and key geographies.
• It ended FY21 with a cash balance of $3.2 million, and with no debt on the balance sheet. The proforma cash balance as of 30 September 2021 was at $8.4 million, after the recent capital raise activities.

Trend in Revenue (Source: Analysis by Kalkine Group)

Key Risks: The company is predominantly a technology-driven company and disruption in this space by some its peers can impact the business of the company.

Outlook: The company’s TrafficGuard software has found place in the Google Cloud Marketplace, and this provides an additional sales channel. The development also provides the company with access to Google Cloud’s customer base across numerous target countries. The company is also focused on implementing an integrated sales approach in order to convert its Freemium subscribers into paying customers. It has reported an increase in annualised revenue by ~56% to $1.6 million in Q1FY22.

Stock Recommendation

The stock of AV1 gave a positive return of ~85.27% in the past one month. The stock is currently trading above the 52-weeks’ average price level band of $0.091- $0.225. Considering the current high trading levels, recent rally in the stock price, a decline in liquidity, and the key risks associated with the business, we suggest investors to book profits and give a ‘Sell’ rating on the stock at the current market price of $0.185, as on November 30, 2021, 11:52 AM (GMT+10), Sydney, Eastern Australia.

Technical Insights:

AV1 stock prices are trading below the downward sloping trend line resistance level and facing the resistance of the same. Moreover, the momentum oscillator RSI (14-period) is trading in an overbought zone at (~81.24 level), which indicates the possibility of downside correction in the stock from the current levels However, prices are trading above 21-period SMA and 50-period which may act as a crucial support level for the stock. An important support level for the stock, is placed at AUD 0.16 while the key resistance level is placed at AUD 0.195.

AV1 Daily Technical Chart, Data Source: REFINITIV

Note: The purple line reflects the RSI (14-day period)

Note 1: The reference data in this report has been partly sourced from REFINITIV.  

Note 2: 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.

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.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

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