Commonwealth Bank of Australia (ASX: CBA)

CBA is an Australian-based bank, providing integrated financial services across Australia, New Zealand, and globally. The company offers retail, premium, business, offshore, and institutional banking services; and funds management, superannuation, and share broking products and services, as well as car, health, life, income protection, and travel insurance. The company was incorporated in 1911 and is based in Sydney, Australia, having a market capitalization is $187.84 billion, at the current price of $104.030 per share.

Financial & Operational Highlights – on 11^th August 21, the company declared the dividend of $2.0 per share and the payment date will be 29^th September 2021. Recently the company announced the off-market buyback of its share for the total amount of $6 billion, reducing its number of outstanding shares and improving the return on equity for its shareholders. The buy-back will open to eligible shareholders on August 30, 2021 and closes on October 1, 2021. In a separate development, CBA raised funds by selling-off its General insurance business to the Hollard Group (Hollard), against the consideration including $625 million of upfront payment along with deferred payments (payable upon achieving certain business milestones) and additional investment from Hollard throughout the 15-year strategic alliance to drive innovation and enhance the customer experience. On the financial front, the bank witnessed 33% growth in home loans in FY21 and 15.6% growth in business loans. Its statutory NPAT soared 19.7% to reach $8.8 billion. The Common Equity Tier-1 Common Equity Ratio reported at 13.1% to comply with the Basel 3 norms.

Technical Analysis- The stock showed a continuous uptrend and formed the recent highs of $109.03 and prices are hovering at those levels. The relative strength index at 57.247, which is in the middle range of the zone, implying a lack of further trend continuation or formation from current levels. The 21 days simple moving average is hovering below the stock price at $101.487, which implies the further upside movement of the stock from current levels. For the prices to keep preventing from entering into the bear territory or profit booking, the support is placed around $96.48. Since the prices are close to the lifetime high, hence the resistance is at $108.92, which needs to be taken off the charts for prices to head towards the North. 

Upsurge in lending, improved profitability, behemoth buyback plans, elevated price levels gives the investors slight out of comfort levels for investment purposes. Hence, we give the stock the rating of 'Expensive' and advise the investors to avoid at the closing price of $104.030, down by ~1.75%, as of 13^th August 2021.

Daily Technical Chart – CBA

Source: REFINITIV

Pearl Global Limited (ASX: PG1)

PG1 is engaged in the environmental technology service provider. PG1 is a clean conversion technology company, that converts tires into secondary products like fuel oil, steel, carbon char, and energy. The company is based in Stapylton, Australia, having a market capitalization of $16.73 million, at the current price of $0.039 per share.

Financial & Operational Highlights – On 2^nd August 21, the company announced to raise $6 million from major institutional investors through placement for $5.25 million and up to a further $0.75 million through a non-underwritten Share Purchase Plan for its existing eligible shareholders. The proceeds will be utilised for operations and further working capital management for running its operations smoothly and efficiently. The company released its quarterly activities report on 30^th July 2021, for the quarter ending 30^th June 2021, where it stated that it expanded its customer base portfolio through a new Supply Agreement with Alex Fraser Pty Ltd, Australia’s leading producer of sustainable materials for the civil construction industry. On the financial front, the company reported an increase in cash receipts from customers for the quarter ended 30^th June 2021 to $0.43 million. Further, the cash outflows stood at $1.33 million and cash balance stood at ~$2.96 million as of 30^th June 2021.

Technical Analysis- The stock showed a continuous downtrend and formed the recent lows of $0.035 and prices are hovering at similar levels. The relative strength index at 41.293, which is in the middle zone of the range, giving the hint of range-bound movement in the coming period and a breakout on either side can lead to a strong trend formation.  The 21 days simple moving average is hovering above the stock price at $0.043, which implies the further downside movement of the stock from current levels. The support is $0.030, and resistance is placed at $0.055.

Improving revenues and reducing cash outflows, with stock-taking support at the lifetime lows, gives the investors a comfort of cheap valuations in terms of bargain hunting. Hence, we give a 'Speculative buy' rating to the stock at the closing price of $0.039, up by 8.33%, as of 13^th August 2021.

Daily Technical Chart – PG1

Source: REFINITIV

Victory Mines Limited - (ASX: VIC)

VIC is engaged in the exploration and development of mineral properties in Australia, focused on gold, nickel, cobalt, and copper deposits. The key projects are Coogee Gold Project located in Kalgoorlie; the Bonaparte Project in Kimberley region; the Malamute and Husky Project in New South Wales; the Copper Mountain Project in Newman; and the Galah Well and Peperill Hill projects in Goldfields. The company is based in Perth, Australia. The market capitalization stood at $13.10 million, at $0.002 per share

Financial & Operational Highlights – on 30^th July 2021, the company announced that it raised $2.5 million to complete the drilling at the Coogee Copper-Gold project and various other projects in the pipeline during 2021/22. From its Coogee project, one metre re-split drill sample assays confirm high grade and broad gold-mineralized intervals previously reported. On the financial front, the company did not receive any cash receipts from its customers in 12 months ended 30^th June 2021. The cash balance declined to $0.99 million for the quarter ending on 30^th June 2021, from $1.46 million on 31^st March 2021.

Technical Analysis- The stock exhibits a downtrend with low volatility in terms of the range between highs and lows of $0.004 and 0.001. The relative strength index at 67.69, which is in the middle range of the zone, points for directionless movement, which can eventually lead to a breakout on either side.   The 21 days simple moving average is hovering closer to the stock price at $0.0024, which implies the lack of strong trend formation from current levels. The support for the current trend is at $0.001 and the resistance is at $0.0040. Breaking either side of the range will give a clear picture of the trend formation.

Lacking cash receipts from customers, declining cash balances, and lifetime low stock prices with the declining volatility in the price range, we give an 'Avoid' rating on the stock at the closing price of $0.002, as of 13^th August 2021.

Daily Technical Chart – VIC

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 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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