AMTD Digital (HKD) stock price zoomed upwards on Wednesday after the company published mixed financial results. It jumped to a high of $3.90, its highest level since March 21st. It has soared by more than 25% from its lowest level this year, giving it a market cap of over $620 million.
AMTD Digital earningsIn a statement on Tuesday, AMTD Digital said that its revenue in the six months to October dropped to $8.6 million from $13.9 million in the same period in 2022.
On the positive side, its profit for the period rose to $30.1 million from the previous $10.6 million. The sharp increase in profits happened because of the change in fair value on financial assets at fair value, which rose to $16 million.
Also, the company noted that the other gains section generated over $14 million. The company attributed the other section to the disposal of certain subsidiaries during the period.
As such, excluding these one-off events, the company actually made a loss during the period, which is a concern. AMTD Digital now hopes that its hotel operations, hospitality, and VIP business will be a key revenue generator going forward. This division came from its acquisition of AMTD Assets from AMTD Group.
These results came a few months after the company authorised a $20 million share repurchase program. The goal was to reduce the number of outstanding shares and boost the stock performance. In 2023, the company repurchased shares worth about $80 million.
So, is it safe to invest in AMTD Digital? As I have warned in the past, AMTD Digital and AMTD Idea. In the first place, for American investors, it is hard to verify the company’s performance since it does its business in Hong Kong and Mainland China.
For starters, AMTD Digital is a company that operates several businesses in China. It has a media division that operates L’Officiel, a French media company. It also owns The Art Newspaper and DigFin, a digital agency.
Its fintech business runs Airstar Bank, a virtual company it established with Xiaomi. It also runs an investment fund that allocates capital in Asian companies.
AMTD Digital stock price forecast
The daily chart shows that the AMTD Digital share price has been in a strong consolidation phase in the past few weeks. It has remained inside the support and resistance levels at $2.91 and $3.90.
HKD’s stock is consolidating at the 50-day moving average while the Average True Range (ATR) has moved sideways. The Relative Strength Index (RSI) has pointed upwards. Therefore, the outlook for the stock is neutral with a bearish bias. I suspect that it will remain in this range and then have a bearish breakout. If this happens, it will likely retest the support at $2.91.
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