FireAngel Safety Technology Group PLC

FireAngel Safety Technology Group PLC is an FTSE AIM All-Share index listed Company focused on the business of design, sale and marketing of smoke and carbon monoxide (CO) detectors and accessories.

2022. will release the FY21 trading update in late January 2022.

Investment Rationale for Valuation – Sell at GBX 15.80

• Loss-Making Entity: The Company had been consistently reporting a net loss from the last three years (FY18 to FY20).
• Low Market Capitalization: The stock price may undergo sizeable correction considering its penny nature.
• Target Price Breached: The Company’s stock price has breached the target levels mentioned in the last coverage. Thus, it would be a reasonable profit booking opportunity for the clients.
• Technical Indicators: From a technical standpoint, FA. is hovering around the upper Bollinger band, indicating a bearish price pattern. Furthermore, the 14-days RSI of ~89.97 approaches overbought territory and indicates a correction in the stock price.

Key Risks

• Federal Reserve Meeting Minutes: The recent Federal Reserve meeting minutes indicated an earlier and faster rate hike. Thus, it could adversely impact the global Equities.
• Omicron Variant: The Government-led restrictions under Plan B because of an increasing number of Covid-19 cases in the UK may adversely impact the UK Equities.

Trading & Business Update (as of 20 December 2021)

• Revenue Guidance: The Company now expects FY21 revenue to remain at the lower end of market expectations.
• Net Debt: Net debt at the end of FY21 is expected to be ahead of market expectations.

One Year Share Price Chart

 (Source: REFINITIV; Analysis done by Kalkine Group)

Valuation Methodology: EV/EBITDA Approach (NTM) (Illustrative)

Conclusion

The Company had trimmed down the FY21 revenue guidance with the recently released trading & business update. Moreover, it had also highlighted of global supply chain issues persisting in H2 FY21 as well. Furthermore, the stock price surged recently and breached the target levels provided in the last coverage. Thus, it would be prudent for the clients to book profit at the current levels on this Company. The stock made a 52-week low and high of GBX 12.41 and GBX 28.63, respectively.

Based on the reduced revenue guidance, loss-making nature, and unfavourable valuations conducted above, we have given a “SELL” recommendation on FireAngel Safety Technology Group PLC at the current market price of GBX 15.80 (as on 11 January 2022 at 09:00 AM GMT).

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

*All forecasted figures and Peer information have been taken from REFINITIV.

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