Harris Technology Group Limited 

HT8 Details

Business Update: Harris Technology Group Limited (ASX: HT8) is engaged in online e-commerce destination in Australia. The company owns online shopping destinations, such as YourHomeDepot.com.au, ht.com.au, WowBaby.com.au and Anyware.com.au. On 24 June 2021, the company announced robust sales during a promotion on Amazon on 21 June 2021 and 22 June 2021. HT8 has registered a sale of $429,963 (Unaudited), an increase of 32% from the last promotion on 13th & 14th October 2020. HT8 has been adding products and categories online, considering an increasing interest from consumer towards online purchases amid the Covid-19 situation.

3QFY21 Highlights: HT8 has posted a robust increase in sales to $10.4mn (unaudited) in 3QFY21 against $3.4mn in 3QFY20. During 3QFY21, HT8 has commenced a partnership with MYSALE Group PLC on Australian e-commerce sites. HT8 may list their products on the sites which are owned by MYSALE Group. 

1HFY21 Financial Highlights: HT8 has reported a robust increase in sales revenue to $19.39mn in 1HFY21 against $4.16mn in 1HFY20. The company has posted a profit of $1.06mn in 1HFY21 against a loss of $0.16mn in 1HFY20. The cash balance improved to $2.22mn as on 31 December 2020 against $1.17mn as on 30 June 2020. 

Revenue trend (Source: Analysis by Kalkine Group)

Key Risks: The company is engaged in providing products across various categories online. Therefore, any failure of technology may impact the business severely. In addition, the company holds interest-bearing liabilities. Thus, any severe change in interest rates may lead to financial losses for the company. 

Outlook:   The company has announced on 23rd April regarding raising of $5mn via placement of 40mn shares at an issue price of 12.5 cents per share. The funds will be utilised towards obtaining additional inventory, expanding warehouse capacity, venturing into new product categories etc. 

Stock Recommendation: The stock of HT8 gave a return of ~13.63% in the last one month and a return of ~-3.84% in the last three months. The current market capitalisation of HT8 stands at ~$35.73mn as of 28th June 2021. The stock is currently trading above the average 52-weeks’ price level range of ~$0.027-~$0.225. On the technical analysis front, the stock has a support level of ~$0.11 and a resistance of ~$0.15. On a TTM basis, the stock of HT8 is trading at a P/BV multiple of 19.0x higher than the industry (Software & IT Services) average of 5.1x, thus seems over-valued. Considering the company has registered an increase in total current liabilities as on 31 December 2020, increase in distribution expenses in 1HFY21, associated business risks, and valuation on TTM basis, we suggest investors to book profits and give a “Sell” rating on the stock at the current market price of $0.13, as on Jun 28, 2021, 11:03 AM (GMT+10), Sydney, Eastern Australia.

HT8 Daily Technical Chart, Data Source: REFINITIV

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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