Luxxfolio Holdings Inc. (CSE: LUXX) is a Canada-based financial technology company involved in the development of a cloud-based blockchain platform enabling users to record and authenticate luxury assets and use them to qualify for personal financial products.

Key highlights

• Operational update: On March 3, 2022, the company reported that its Bitcoin Mine site operating at 139 PH/s (Peta Hash/ second) for February 2022, similar to the January 2022 numbers. The Bitcoin equivalent reserves for February 2022 were 83 BTC and 31 Ethereum (ETH) as compared to 82.6 bitcoins for January 2022.

• Improved cash flows from operations: For Q1FY22, the group recorded an increase in cash flows from operations to USD 467.02 K as compared to the cash used in the operations of USD 15.14 K in the pcp. The majority of the cash flows were from the positive net income of USD 951.61 K for the reported period vs Net loss of USD 10.38 K in pcp.

Risks associated with investment

The group is exposed to volatility in the prices of Bitcoin which could sway the revenues and profits of the company. Further, the risk of cyber security and theft are key operations risks, the company is vulnerable to.  

 Financial overview of Q1FY22 (Expressed in USD) 

Source: Company Filing 

• The company reported its revenues for the first time in Q1FY22 of USD 3.52 million, before that the company was not generating any revenues.

• The total expenses increased to USD 1,415 K for the reported period vs USD 10.38 K in the pcp, on account of an increase in consulting and General and administrative expenses during the reported period.

• The group stated its Net income of USD 951.61 K for the reported period as compared to the net loss of USD 10.38 K in the pcp.
  

Stock recommendation 

The company transitioned into a Net income of USD 951.61 K for the quarter ending on November 2021 from the net losses of USD 10.38 K in the previous comparable period. The increase in Bitcoin prices is driving the revenues of the company and there is a slight increase in the Bitcoin reserves for the February 2022.  

Therefore, based on the above rationale and valuation, we recommend a “Watch” rating at the closing price of CAD 0.295 on March 14, 2022. Additionally, the markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

One-Year Technical Price Chart (as on March 14, 2022). Source: REFINITIV, Analysis by Kalkine Group 

 Technical Analysis Summary

Investors can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario.

Disclaimer

The advice given by Kalkine Canada Advisory Services Inc. and provided on this website is general information only and it does not take into account your investment objectives, financial situation and the particular needs of any particular person. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. The website www.kalkine.ca is published by Kalkine Canada Advisory Services Inc. The link to our Terms & Conditions has been provided please go through them. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations later.