Ehang Holdings Limited

Ehang Holdings Limited (Nasdaq: EH) provides autonomous aerial vehicle technology platform for eco-friendly air mobility.

EH has scheduled its financial results for the first and second quarter of 2021 between late August and early September.

Investment Rationale – WATCH at USD 26.30

• In the last financial update for FY20 (for the year ended 31 December 2020, as on 15 June 2021):
  • EH reported 47.8% year-on-year increase in revenue despite the pandemic impact.
  • However, operating loss and net loss were also surged 97% and 92% against FY20, due to high operating expenses.
• On 26 July 2021, EH commenced operations at its new AAV production facility in Yunfu city, China. It should scale up the Company’s production capabilities.
• The resurgence of Covid-19 cases with delta variant can create operational difficulties and cause shortage of labour and raw-materials.
• From a technical standpoint, the current market price is sustaining below the 20-day EMA (USD 29.47), reflecting a bearish price momentum.
• In the last six months, EH’s s price has fallen over 61%, reflecting significant underperformance against the Nasdaq index benchmark.

One Year Share Price Chart

 (Data Source: Refinitiv, Analysis by Kalkine Group)

Conclusion

Based on the worsened losses, gloomy outlook, macroeconomic instabilities, and bearish price trend, we have given a “WATCH” recommendation on Ehang Holdings Limited at the closing market price of USD 26.30 (as of 30 July 2021).

Youdao Inc  

Youdao Inc (NYSE: DAO) develops learning content, solutions, and applications. It caters to a wide spectrum of subject matters suiting to different age groups and areas of interest.

Investment Highlights – WATCH at USD 8.82

• In the last financial update for Q1 FY21 (for the three months ended 31 March 2021):
  • Total net revenue soared 147.5% against Q1 FY20, on the back robust gross billings for online courses.
  • Thus, it reduced operating loss margin to 23.9% in Q1 FY21.
  • However, loss from operations widened to RMB320.9 million in Q1 FY21 from MB176.0 million in Q1 FY20, following the 195.5% year-on-year increase in sales and marketing expenses.
• Recent restrictive guidelines from the Chinese government to curb after-school tutoring and excessive homework, had a devastating impact on the DAO’s share prices.
• From a technical standpoint, the current market price is sustaining below the 20-day EMA (USD 16.35), reflecting a bearish price momentum.
• In the last year, DAO' s price has fallen over 78%, reflecting significant underperformance against the NYSE index benchmark.

Share Price Chart

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

Conclusion

Based on the weak fundamentals, tightened regulations over after-school tutoring services, unfavourable technical stance, and macroeconomic uncertainty, we have given an “WATCH” stance on Youdao Inc at the closing price of USD 8.82 (as on 30 July 2021), while we look forward to reviewing how the Company will adapt to new rules and regulations imposed by the PRC (People’s Republic of China) regulators.

Trivago NV

Trivago NV (Nasdaq: TRVG) provides accommodation search platform to travellers across the world.

Investment Rationale – WATCH at USD 2.94

• On 29 July 2021, TRVG unveiled its Q2 FY21 results for the three months ended 30 June 2021, and reported
  • The seasonal fluctuations in demand and the impact of the Covid-19 disruption adversely affected the operations, and therefore, H1 FY21 revenue were lower as compared to H1 FY20.
  • The Company continued to report operating and net losses, albeit losses were reduced compared to H1 FY20.
• The resurgence in Covid-19 cases can derail the expected recovery for the tourism industry.
• From a technical standpoint, the current market price is sustaining below the 20-day EMA (USD 3.04), reflecting a bearish price momentum.
• In the last three months, TRVG’s s price has fallen ~18.90%, reflecting significant underperformance against the benchmark, Nasdaq index.

Share Price Chart

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

Conclusion

Based on the reduced revenue generation, negative cash flows from operations, significant losses, bearish price momentum, and macroeconomic uncertainties, we have given an “WATCH” stance on Trivago NV at the closing price of USD 2.94 (as on 30 July 2021), while we look forward to monitoring how the Covid-19 pandemic will impact its business and operations. 

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