Graphene Manufacturing Group Ltd. (TSXV: GMG) is an Australian based clean technology-focused company. The company take pride in offering product and solutions for energy saving as well as energy storage.

Key Highlights:

• Prototypes of Graphene Aluminium- Ion Battery in testing stage: On December 22, 2021, the company announced that it sent the prototype of its Graphene Aluminium Ion Batteries to its clients across the globe for testing. These batteries are very quick to rechange and they withhold the capacity for several thousand charges and discharge cycles, most importantly they are non-flammable and fully recyclable. The company filed its patent for this type of technology on November 25, 2021.

Financial & Operational Updates:

• Declining revenues: For Q2FY22 the company reported a decline in its revenue to AUD 0.015 million as compared to the revenues of AUD 0.044 million in pcp. The primary reason for the lower revenue was the declining demand and supply chain disruptions hampering the books of the company.
• Steep rise in Expenses: The major increase in expenses was from the Professional and Consulting fees to AUD 0.50 million for Q2FY22 vs AUD 0.14 million in pcp. Further,one time expenses of Share-based payments were totalled AUD 0.29 million which is 10 times of the AUD 0.029 million in pcp.
• Increase in Losses: Deteriorating revenues from the supply chain constraints and rising expenses, made the company incur a loss for the Q2FY22 of AUD 16.25 million compard to AUD 0.92 million in pcp. The major component of this loss is from the AUD 14.19 million of adjustments to the fair value of the warranty

Source: Company Filing 

Stock Recommendation:

The stock eroded the client's wealth by delivering a negative return of 5.01% in past one week and a negative return of 39.29% in the past three months. The company reported declining revenues with a significant amount of losses mounting up which dents the ability to further raise the operations in the short term to meet its working capital requirements. Borrowing further at the rising interest rates with weak financials will further dampen the mood of the company financials.

On the technical front, the stock rallied from the near term lows of CAD 1.35 in July 2021and made the lifetime high of CAD 7.25 in the preceding four months, November 2021. From there the stock was sold off at every rally and currently heading towards the South by forming lower lows and lower highs. The near term trend suggesting indicator, 50 DMA is currently placed above the stock, indicating a bearish trend for now.

Increasing losses, declining revenues, supply chain disruptions with declining demand and negative chart patterns, gives the investors a sense of discomfort to consider the stock for investment purposes. Hence, we recommend the rating of ‘Avoid’ to the stock at the closing price of CAD 3.60 as of 18 February 2022. 

One-Year Technical Price Chart (as on February 18, 2022). Source: REFINITIV, Analysis by Kalkine Group

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

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