ASE Technology Holding Co Ltd

ASE Technology Holding Co Ltd (NYSE: ASX) provides semiconductor manufacturing services and develop turnkey solutions for front-end engineering test.

Investment Rationale – EXPENSIVE at USD 8.92

• On 29 July 2021, ASX released Q2 FY21 reports and reported
  • Cost of revenue increased by 2% year-on-year.
  • Gross margin and operating margin were slightly improved against Q1 FY21.
  • Loss on valuation of financial assets and liabilities was NT$1,050 million.
• Top 10 customers represented nearly 78% of total net revenues in Q2 FY21. Therefore, heavy reliance on limited number of customers amid macroeconomic uncertainties can impact the Company’s growth trajectory.
• As the stock market remained volatile with speculations regarding premature asset tapering by the US Federal Reserve, the Company abstained from providing full-year guidance.
• From a technical standpoint, the momentum oscillator 14-day RSI (~54.04) moving towards the overbought position.
• In H1 FY21, gross margin, operating margin and net margin remained lower than the industry median of 39.2%, 18.5% and 19.0%, respectively.

One Year Share Price Chart

 (Data Source: Refinitiv, Analysis by Kalkine Group)

Conclusion

Based on overstrained price conditions, gloomy outlook, operational difficulties, and macroeconomic instabilities, we have given an “EXPENSIVE” recommendation on ASE Technology Holding Co Ltd at the closing market price of USD 8.92 (as of 26 August 2021), while we look forward to investing when due corrections are done, and we have clear financial guidance.  

Daqo New Energy Corp

Daqo New Energy Corp (NYSE: DQ) manufactures polysilicon for the global solar PV industry.

Investment Rationale – WATCH at USD 52.02

• On 18 August 2021, DQ released Q2 FY21 reports and reported
  • Produced 21,102 MT (million tonnes) of polysilicon in Q2 FY21 versus 21,471 MT in Q1 FY21.
  • Sales volume was reduced to 21,060 MT in Q2 FY21 from 21,471 MT in Q1 FY21.
  • Gross margin was improved to 68.7% in Q2 FY21 versus 46.4% in Q1 FY21.
• US coronavirus hospitalizations hit 8-month high with over 100,000 patients, it can derail the economic recovery.
• From a technical standpoint, the current market price is trading below the 20-day EMA (USD 53.96) reflecting a bearish price momentum.
• As market awaits for Jerome Powell’s speech and cues regarding early asset tapering, investors’ sentiment will remain subdued.
• On trailing 12-month basis – DQ’s valuation multiples (EV/Sales, Price/Cash Flow, and Price/Book) are overvalued against the industry median, while the Company has lower dividend yield against industry median.

One Year Share Price Chart

 (Data Source: Refinitiv, Analysis by Kalkine Group)

Conclusion

Based on bearish price momentum, gloomy outlook, operational difficulties, and macroeconomic instabilities, we have given a “WATCH” recommendation on Daqo New Energy Corp at the closing market price of USD 52.02 (as of 26 August 2021), while we look forward to investing when due corrections are done, and we have clear financial guidance. 

Lithium Americas Corp

Lithium Americas Corp (NYSE: LAC) is a development stage entity focusing on lithium brine production and pursuing a sedimentary lithium clay project in Nevada, United States.

Investment Rationale – EXPENSIVE at USD 17.78

• It is lossmaking entity that generates no revenue. Moreover, US$4.7 million loss on the JEMSE transaction and higher Thacker Pass expenditures worsened the net loss in Q2 FY21 vs Q2 FY20.
• The pricing and demand for lithium hugely depends upon the success of electric vehicles.
• The stock seems overstrained given the increased general and administrative expenses, higher finance costs, and share of loss on the Caucharí-Olaroz project.
• The inflationary market conditions, resurgence in Covid-19 cases, and speculations regarding Federal Reserve’s asset tapering can dampen the investor sentiments.
• From a technical standpoint, the momentum oscillator 14-day RSI (~57.28) moving towards the overbought position.

Share Price Chart

 (Data Source: REFINITIV, Analysis done by Kalkine Group)

Conclusion

Based on the overtrained prices, macroeconomic uncertainties, absence of revenue, and higher losses, we have given an “EXPENSIVE” stance on Lithium Americas Corp at the closing price of USD 17.78 (as on 26 August 2021), while we look forward to monitoring how the Company will navigate through the macroeconomic instabilities.   

United Microelectronics Corp

United Microelectronics Corp (NYSE: UMC) is a semiconductor foundry with global operations. It provides integrated chips to the electronics industry.

Investment Rationale – EXPENSIVE at USD 11.11

• On 28 July 2021, the Company unveiled Q2 FY21 results and reported an increase in revenue and earnings per share, reflecting digital transformation and 5G adoption.
• However, the Company operates in highly competitive semiconductor and consumer electronics industry, which is facing acute chip shortage globally amid Covid-19 induced supply chain disruption.
• Reduced end-user purchases due to subdued consumer disposal income can hurt overstrained stock prices of the UMC.
• From a technical standpoint, the momentum oscillator 14-day RSI (~61.70) is hovering around the overbought position.
• In H1 FY21, gross margin, operating margin and net margin remained lower than the industry median of 39.2%, 18.5% and 19.0%, respectively.

One Year Share Price Chart

 (Data Source: Refinitiv, Analysis by Kalkine Group)

Conclusion

Based on the global supply chain disruptions, overstretched prices, input cost inflation, and dampened consumer sentiments, we have given an “EXPENSIVE” recommendation on United Microelectronics Corp at the closing market price of USD 11.11 (as of 26 August 2021), while we look forward to reviewing how the Company will navigate through the macroeconomic uncertainties.

AvePoint Inc

AvePoint Inc (NASDAQ: AVPT) is a Microsoft 365 data management solutions provider. The Company was earlier traded under the ticker APXT.

Investment Rationale – WATCH at USD 9.65

• On the profitability front, the Company had widened the net loss to negative USD 11.06 million during Q2 FY21.
• According to the consensus estimates, the Company would remain loss-making for at least two more years.
• From a technical standpoint, the 20-days exponential moving average of USD 9.75 is indicating a correction in the stock price.
• The Return on Equity and Return on Assets remained in negative territory during Q2 FY21.

One Year Share Price Chart

(Data Source: Refinitiv, Analysis by Kalkine Group)

Conclusion

Based on the weak profitability, and unfavourable technical indicators, we have given a “WATCH” recommendation on AvePoint Inc at the closing market price of USD 9.65 (as on 26 August 2021).

Tyme Technologies, Inc

Tyme Technologies, Inc (NASDAQ: TYME) is a U.S-based clinical-stage biotechnology company focused on the commercialisation of cancer therapeutics with a broad range of oncology indications for humans.

Investment Rationale – AVOID at USD 1.06

• The Company had not generated any revenue yet.
• On the liquidity front, the Company had reduced the cash balance from USD 107.5 million as of 31 March 2021 to USD 101.5 million as of 30 June 2021.
• In terms of a technical indicator, the 20-days exponential moving average of USD 1.08 is indicating a correction in the stock price.
• With regards to the profitability, the Company had reported a wider net loss during FY21 when compared with FY20.

One Year Share Price Chart

 (Data Source: Refinitiv, Analysis by Kalkine Group)

Conclusion

Based on the negligible revenue and loss-making nature of the Company, we have given an “AVOID” recommendation on Tyme Technologies, Inc at the closing market price of USD 1.06 (as on 26 August 2021).

Just Energy Group Inc

Just Energy Group Inc (OTC: JENGQ) is a retail energy provider focused on electricity and natural gas commodities in the US and Canada.

Investment Rationale – WATCH at USD 0.97

• With regards to the top-line business, the total sales had witnessed a decline of around 11% during Q1 FY22.
• Moreover, the profitability indicator, base EBITDA, had shown a decline of about 43%, while the unlevered free cash flow had witnessed a significant reduction of approximately 65% during Q1 FY22.
• The Company had witnessed a substantial reduction in top-line revenue and base EBITDA during FY21.
• Furthermore, a 20-days exponential moving average of USD 1.06 is indicating a correction in the stock price.

One Year Share Price Chart

 (Data Source: Refinitiv, Analysis by Kalkine Group)

Conclusion

Based on the decline in the top-line revenue & base EBITDA and weak technical indicators, we have given a “WATCH” recommendation on Just Energy Group Inc at the closing market price of USD 0.97 (as on 26 August 2021).

*The reference data in this report has been partly sourced from REFINITIV.