Vection Technologies Limited (ASX: VR1)

With the use of three-dimensional (3D), virtual reality, industrial Internet of Things (IoT), augmented reality, and computer aided design (CAD) solutions VR1 transforms industrial companies digitally. VR1 was incorporated in 2016, and its product line includes FrameS, 3D Real-Time Configurator, 3D Modeling, 3D Rendering and MINDESK. Its market capitalization stood at AUD 255.29 million as of 26^th November 2021.

Financial and Operational Updates: As per 23^rd November 2021 update, it unveiled its greatest milestone - FrameS Metaverse by introducing its autonomous 3D World content creation and its integration with the Webex by Cisco is planned for the second half of FY22. As per the Sales and Total Contract Value (TCV) update on 17^th November 2021, its TCV increased by ~80% from the 1QFY22 and current run-rate stands at ~AUD 9 million in FY22, owing to strong growth in Defence, Military & Law Enforcements and AEC & Real Estate sectors.

Its cash balance of ~AUD 7.8 million as of 17^th November was increased as a result of exercise of stock options for AUD 0.95 million. As per the Quarterly Update on 29^th October 2021, its sales receipts for 1QFY22 increased by ~172% Q-o-Q and were reported as ~AUD 2.8 million. It reported business activities expenditure at ~AUD 3.5 million mainly constituting ~AUD 1.3 million spent towards operating costs of sales.  

As per the Annual Year Report released on 30^th September 2021, its total revenue increased by ~10.58% to reach ~AUD 3.47 million in FY21. It had experienced a triple digit growth in 2HFY21. However, its net losses after taxes increased from ~AUD 1.17 million in FY20 to ~AUD 2.44 million in FY21.

Technical Analysis: On a daily chart, VR1 prices are sustaining above an upward sloping trend line breakout level, indicating the possibility of a more upside movement in the stock. The prices are sustaining above the trend following indicators 21-period SMA and 50-period SMA, further suggesting an upside direction. However, the momentum oscillator RSI (14-period) is trading in an overbought zone at (~78.68 level). An immediate support level for the stock is at AUD 0.23 while immediate resistance level is AUD 0.32.

Looking forward, VR1 is focused on increasing its global sales in EMEA, AMER and APAC coupled with M&A opportunities in North America. With the major milestone “FrameS Metaverse” announcement, investors with high-risk appetite can consider a ‘Speculative Buy’ position on the stock while also incorporating the support and resistance as one of the tools to analyze the investment opportunity. The stock was analysed as per the current market price of AUD 0.268 per share, as of 26^th November 2021, 10:58 AM (GMT+10), Sydney, Eastern Australia. However, the risk levels are extremely high in view of the further execution of its expansion strategies.

Daily Technical Chart – VR1

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 Yellow colour line represents the Trendline.

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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