Wesfarmers Limited (ASX: WES)

WES is in the retail business in Australia, New Zealand, the United Kingdom, engaged in various business operations, such as supermarkets, liquor, hotels, and convenience stores; home improvement; office supplies, and an industrials division. The company's segments include Home Improvement, Department Stores, Office Works, Industrials, which includes Resources, WIS and WesCEF, and others. The company was incorporated in 1914 and headquartered in Pert, Australia. The market capitalization stood at $70.92 billion at $63.35 per share.

Financial & Operational Highlights – The company will be announcing its full year's results for 2021 on 27^th August 2021. As of 12^th July 2021, the company submitted a non-binding indicative offer to the Board of Australian Pharmaceutical Industries Limited (API) to acquire 100% of the outstanding shares at $1.38 (at a 21% premium from its closing price) per share through a scheme of the arrangement, which eventually turned down by the Board of API, stating that it is not in the best interest of its shareholders. On 16^th July 21, the company announced that Covalent Lithium, the joint venture company owned by WES and Sociedad Quimica Minera de Chile S.A., received the clearance for the construction and operation of lithium hydroxide refinery as part of the Mt. Holland Lithium project. For H1FY21 ending on 31^st December 2020, the company witnessed an increase in revenues by 16.6% YoY to $17.77 billion and the profits after tax increased to $1.4 billion, up 25.5% YoY and the net cash position stood at $871 million at the end of H1FY21.

Technical Analysis- The stock showed an uptrend and reached the lifetime high of $63.60 and hovering at there as of now. The Relative Strength Index is showing a reading of 73.977 which is at the upper end of the range, confirming the continuing upward movement of the stock from current levels. The 21 Day Simple Moving Average is currently hovering below the stock price at $60.644, indicating a strong bullish bias to the stock price taking it to the North. Keeping the volatility of the stock into consideration, the support is placed at $56.25 and the resistance is not viable to be placed on the charts as the prices are at a lifetime high itself.

Lifetime high stock prices gives uncertainty to the investors at such elevated prices, we suggest investors to 'Avoid’ the stock at the closing price of $63.350, up by ~1.278%, as of 5^th August 2021.

Daily Technical Chart – WES

Source: REFINITIV

Little Green Pharma Limited (ASX: LGP)

LGP is an Australia-based medicinal cannabis company, engaged in the research and development, cultivation, production, manufacturing, and distribution of medicinal cannabis products in Australia and globally. The company was incorporated in 2016 and headquartered in West Perth, Australia. The market capitalization stood at $181.43 million at $0.730 per share.

Financial & Operational Highlights – On 28 July 2021, the company released its quarterly activities update for the period ending 30^th June 2021, stating the transformational period over which the company strategically positioned itself as a leading global pure-play medicinal cannabis producer. It announced the successful acquisition of the world-class GACP/GMP medicinal cannabis facility in Denmark (EU) for $21.4 million and completed the capital placement of $27.2 million via placement across institutional and sophisticated investors. On the financial front, the company recorded the growth in cash receipts to $1.82 million on 30^th June 2021 versus $1.51 million on 31^st March 2021. The cash balance increased to $40.23 million as of 30^th June 2021.

Technical Analysis- The stock is moving in a wide range bound manner heading towards the North, giving spikes at odd times, and later cooling off by sharp sell-off. The relative strength index at 37.807, 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 above to the stock price at $0.815, indicating some more bearishness for the stock at current levels. For the prices to prohibit from diving into the bear territory, the support of $0.64 should be held firmly. Similarly, for the prices to regain the uptrend, a resistance of $0.88 needs to be taken off with strong volumes.

A volatile and range bond stock prices gives the level of un-comfort to the investors to get into the stock, hence we suggest investors to ‘Avoid’ the stock at the closing price of $0.73, down by ~6.41%, as of 5^th August 2021.

Daily Technical Chart – LGP

Source: REFINITIV

Predictive Discovery Limited (ASX: PDI)

PDI is engaged in the mining and exploration of gold properties across West Africa and Australia. The Company's segments include Corporate, Gold Aust, Gold Burkina Faso and Cote d'Ivoire. The Company holds four prospective exploration permits in Cote D'Ivoire: Kokumbo, Ferkessedougou, Boundiali and Kounahiri, covering a total area of over 1,533 square kilometres. The company was incorporated in 2007 and headquartered in West Perth, Australia. The market capitalization stood at $229.51 million at 0.185 per share.

Financial & Operational Highlights - On 2^nd August 21, the company announced the positive results of high-grade gold mineralization, from the 5 Diamond drillings and Reverse Circulation holes at its Bankan Gold Project, Guinea.  The quarterly activities report for the period ending on 30^th June 2021 was released on 30th July 2021, stating drilling updates of various projects such as NE Bankan, Bankan Creek, Koundian project, stating the various proportion and quality of gold mineralisation underlying there. The company raised $26.5 million to fund its Bankan Project, via private placement to institutional and sophisticated investors. The company did not receive any cash receipts from its customer in the past 12 months ending on 30^th June 2021. The cash balance stood at $22.73 million as of 30^th June 2021.

Technical Analysis- The stock showed a strong uptrend and printed the recent hights of $0.19, and hovering there as of now. The Relative Strength Index is currently showing a reading of 76.438, which is in the upper end of the range, indicative of a strong trend continuation from current levels. The 21 Days Simple Move Average is placed below the stock price at $0.133, implying a more bullish trend continuation for the stock. For the trend to remain intact, the prices should not dip below the support of $0.145 and the resistance is placed at $0.24.

Due to lack of operating revenues accompanied by rising stock prices, we give ‘Avoid’ rating to the stock at the closing price of $0.185, up by ~8.823%, as of 5^th August 2021.

Daily Technical Chart – PDI

Source: REFINITIV

Weebit Nano Limited - (ASX: WBT)

WBT is engaged in developing silicon oxide (SiOx) resistive random access memory (ReRAM) technology. The focus of ReRAM technology is to replace flash memory and is viewed as a flash replacement. The Company's products are used in various applications, such as in computers, consumer electronics, smartphones, tablets, enterprise storage, automotive infotainment and navigation systems, healthcare, wearables and the Internet of Things (IoT). The company was incorporated in 2015 and is based in Melbourne, Australia, having a market capitalization is $336.34 million, at the current price of $2.66 per share.

Financial & Operational Highlights – on 25^th June 2021, the company announced it has created the industry's first commercial integration of an oxide-based ReRAM (OxRAM) cell with an ovonic threshold switching (OTS) selector, enabling the company to commercialize its path for the discrete (standalone) memory market. Along with this, the company is in advance talks with potential production partners and customers and design finalization for carrying its production for testing by the post-quarter-end.  On the financial front. The company did not receive any cash receipts from its customer for the past 12 months ending on 30^th June 2021. For the quarter ended 30^th June 2021, the company received grants totalled $1.81 million towards the R&D, which helped to post operating cash inflows of $0.63 million. The cash balance increased to $21.73 million as of 30^th June 2021 from $19.96 million in 3Q FY21.

Technical Analysis- The stock showed an uptrend and printed the recent highs of $4.27 and corrected from there forming lower highs and lower lows, to find stability at support levels. The Relative Strength Index is currently showing a reading of 67.042, which is at the upper end of the zone, indicative of further strong trend formation from current levels. The 21 Days Simple Move Average is placed below the stock price at $2.225, implying a more bullish trend continuation for the stock. The support for the current trend is at $1.97 and the resistance is at $3.09. Breaking either side of the range will give a clear picture of the trend formation.

Lack of operating revenues, dependence on the grants, and stock prices heading towards the south make the stock less attractive from an investment perspective. Hence, we suggest investors to 'Avoid’ the stock at the closing price of $2.660, down by ~2.92%, as of 5^th August 2021.

Daily Technical Chart – WBT

Source: REFINITIV

Vulcan Energy Resources Limited (ASX: VUL)

VUL is engaged in mineral exploration activities in Europe, focussed on lithium, copper, zinc, gold, silver, lead, magnetite, and sulfur deposits. The company holds interests in the Zero Carbon Lithium project; and Løkken, Grimsdal, Storwartz, Killingdal, and Tverrfjellet projects located in NorwayVulcan. The company was incorporated in 2018 and is based in Perth, Australia, having a current market capitalization of $1.25 billion at the current $11.48 per share price.

Financial & Operational Highlights- On 4^th August 2021, the company announced the commencement of the worlds first Life Cycle Assessment (LCA) study on the environment-related concerns with lithium hydroxide production from Vulcan’s Pre-Feasibility Study (PFS), helping the compy to assess its negative CO2 emission intensity involved in the whole production process. As per the quarterly activities report on 29^th July 2021, the company signed an agreement with LG Energy Solutions to supply 10,000 metric tonnes per year of Lithium hydroxide post. On the financial front, the company did not receive any cash receipts for the past year ending on 30^th June 2021. The cash outflows from operations increased to $1.52 million in 4Q FY21 as compared to the outflow of $1.07 million in 3Q FY21 ending on 31^st March 2021. Further, the cash balance depleted to $114.71 million as of 30^th June 2021 as compared to $117.43 million in the preceding quarter.

Technical Analysis- The stock showed a continuous uptrend, with few dips in between giving the stock a strong foundation base at higher levels. The relative strength index at 75.498, which is at the upper end of the range, giving a strong conviction of further bullish trend continuation at current levels. The 21 Days Simple Move Average is placed below the stock price at $9.341, indicating the stocks inch towards the North. The support is placed at $9.56 which can bring further buying interest among the investors, and the resistance is placed at $14.20, bringing the sellers to the front step.

Though the operating revenues were missing, various positive developments such as contract with LG Energy Solutions and rising stock prices make the stock attractive. We give a ‘Speculative Buy’ rating on the stock at the closing price of $11.480, down by ~0.434%, as of 5^th August 2021.

Daily Technical Chart – VUL

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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