engage:BDR Limited

EN1 Details

engage:BDR Limited (ASX: EN1) is an advertising marketplace for desks, agencies, and brands, offering unique, transparent inventory for programmatic buyers, publishers, and advertisers.

Result Performance – For the First Quarter Ended 31 March 2021 – (Q1FY21)

In the release dated 30^th April 2021, it was mentioned that the company ended the first quarter of 2021 strongly, and revenues are on track to return to the pre-covid levels in April month. In the same release, the company stated that April 2021 revenue is forecasted to surpass US$1.2 million (A$1.6 million), with daily revenue reaching ~US$60K (A$79K). This rise in revenue is partially driven by new, recently announced integrations that are beginning to generate incremental and recurring revenue. The first four months of 2021 replicated the revenue level seen in the first four months of 2020 before COVID’s negative impact.

Key Data (Source: Company Reports)

Recent Updates

• On 27^th May 2021, the company announced that it has signed a new partnership on 26 May 2021 (AU time) with Smart, an industry-leading ad serving platform. The partner company will provide monetization solutions for the Company’s advertising inventory, within the partnership.
• On 10^th May 2021, the company announced that it has signed a new partnership on 4 May 2021 with Infolinks, the 3^rd largest publisher marketplace in the world. The company now provides monetization solutions to Infolinks for their advertising inventory.

Key Risks:

The company is exposed to a variety of financial risks: market risk, credit risk, and liquidity risk. Further, it is exposed to foreign currency risk associated with the Australian dollar and interest rate risk.

Outlook:

The company expects continued growth in supply and demand integration onboarding, particularly within AdCel for 2021, as AdCel's technology has been developed to a stage in which it is capable of monetizing inventory across ConnectedTV Apps. With AdCel focused solution for ConnectedTV app and other partnerships, the company plans to grow programmatic ConnectedTV and mobile app ad revenues steadily and significantly throughout 2021. These revenues are no longer reliant on third-party technologies as they were previously, hence, providing more stability in the business growth.

Technical Overview:

Weekly Chart –

Source: REFINITIV 

Note: Purple colour lines are Bollinger Bands® with the upper band suggesting overbought status while the lower band oversold status, and yellow lines are Fibonacci retracement lines which measure price rebound and backtrack. https://www.bollingerbands.com/

For a long time, the stock has been trading in the range provided by the 23.6% retracement level of $0.006 on the upside and a low of $0.004 on the downside. While staying in the aforesaid range, the stock has given a flattish close for the ongoing week at $0.005. The technical indicator RSI with a reading around 46 and a flattish curve at the end, suggests the fattening of bullish momentum for the stock.

Going forward, the stock may have resistance around $0.006 whereas support could be around $0.004.

Stock Recommendation:

The company has posted gross margin of 38.8% in FY 2020 as compared to 54.4% in FY 2019. Also, the company is having negative net margin in FY 2020. The stock of the company declined by ~16.67% in 3 months. It has made a 52-week low and high of $0.004 and $0.013, respectively. 

Considering the aforesaid facts and current trading levels, we suggest investors to liquidate the stock.

Hence, we give a “Sell” recommendation on the stock at the current market price of $0.005 per share on 2^nd July 2021.

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.

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.

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