Hydrogenone - financials highlight growth and strength for the future but the chart is yet to follow.

Financials

In the year that ended 2022, the company reported revenue of £3.178M with a total profit for the year of £1.554M compared to -£1.607M in revenue with a profit of -£2.417 in 2021. A great turnaround and increase year-on-year. As a result, Hydrogeone managed to report positive earnings per share of 1.27p for the year. If we turn to the balance sheet, we can see that the total assets to total liabilities ratio grew 25%, and therefore led to growth in total equity of 25% YoY. Overall, the financials are suggesting growth and strength within the business in the mid-long term future. However, one important factor that should be monitored is its cash on hand, its value has decreased from £34M to £18M. This may not be a problem for now, but if there are signs of cash being burnt with gradual increases in debt then this could become a problem.

Technicals 

From a technical aspect, the stock is currently trading at around 54p a share. Earlier in the year back in March, it hit a low of 38p before bouncing back and reaching 77p in June, though since June it has seen a selloff. On the basis of a weekly timeframe, we can see two important support levels, the first one at 45p followed by the key one at 38p (all-time low). A break below 38p would suggest that more downside is possible and the price has not yet found its ‘bottom’. On the other hand, as the price almost tested the support of 45p and closed above it, this may be a suggestion of some consolidation going into the back end of the year. If the support levels manage to hold, we would then look at the first resistance level sitting at 58p (white oval). A break above it would then allow investors to look towards June’s resistance of 77p (yellow oval). The technical indicators are slightly mixed, with a bias of negative-neutral as the MACD is flat and the RSI reads 42. Risk to reward is on the weaker side for now, unless signs of strength within support appear. That would create a better buy opportunity.