Eden Innovations Limited

EDE Details

Eden Innovations Limited (ASX: EDE) Eden is dedicated to clean technology solutions. It developed, manufactures, and markets EdenCrete®, an innovative high-performance concrete admixture and OptiBlend®.

Q1FY22 Update Report (For the Quarter Ended 30 September 2021)

• The company reported an increase of 95% YoY in its total sales in Q1FY22 with encouraging sales growth across all products.
• EdenCrete® US Sales increased by 16% YoY to A$469,513 (US$345,103).
• Total OptiBlend® sales grew significantly by 187% YoY to A$998,358 with USA OptiBlend® sales stood at A$801,995 (US$589,485) and India OptiBlend® sales were A$196,363 (INR 10.695 million).
• The non-renounceable pro-rata rights offer made to shareholders with respect to a prospectus dated 1 September 2021 (Offer Document) raised A$2,316,436 before costs.

Source: Company Reports, Analysis by Kalkine Group

Outlook

EDE is hopeful of achieving considerable sales growth across all products as restrictions gradually ease and more normal activity returns. The group proposes to sustain developing and marketing its technologies, including EdenCrete® and OptiBlend®. Besides, the company, on 29 October 2021, has agreed to make placements of shares for the entire shortfall of $1.507,235.99 from the recent non-renounceable Rights Issue. Further, it will undertake an additional placement of $1.1million to institutional and sophisticated investors to raise around A$2.607million (before the costs of the issue). The company will utilise the proceeds from the placement for general working capital purposes.

Key Risks

The main risks the group is exposed to through its financial instruments are liquidity risk and credit risk. It is also prone to fluctuations in foreign currencies arising from the sale and purchase of goods and services in currencies other than the companies’ functional currency.

Stock Recommendation

EDE has delivered 6-months and one-year returns of ~-11.54% and ~-14.81%, respectively. The stock is trading lower than the average of the 52-week high price of $0.045 and the 52-week low price of $0.015, which indicates a good opportunity for accumulation.

The company’s debt to equity ratio remained lower at 0.29x in FY21 versus the industry median at 0.53x. The company’s asset to equity ratio also stood at 1.35x in FY21 better than that of 1.45x reported in FY20.

Considering the aforementioned factors along with its healthy sales performance in Q1FY22, and decent liquidity position with cash and cash equivalents of A$2.035 million at the end of Q1FY22, a “Speculative Buy” recommendation has been assigned on the stock at the current market price of $0.022 per share as on 10:30 am AEST as on 25^th November 2021.

Technical Overview

Daily Price Chart

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 on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the analysis has been achieved and subject to the factors discussed above alongside support levels provided.

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 uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices