1. Northern Minerals Limited (Recommendation: Speculative Buy, Market Cap: ~$193.84 million)

Improved Top and Bottom Line in H1FY21: Northern Minerals Limited (ASX: NTU) is committed to becoming a principal supplier of ethically produced Rare Earth Metals and separated products.

For H1FY21, the company reported total revenue and other income of $6.31 million, up from $0.75 million in H1FY20, mainly due to the recognition of research and development rebates. The company’s net loss after tax stood at $5.6 million, in H1FY21, down from the loss of $29.9 million in H1FY20, mainly due to the operating of the pilot plant at a reduced level to previous periods and a continued focus on exploration activities. Over the June 2021 quarter, the company completed the installation and commissioning of the ore sorting system at the Browns Range Heavy Rare Earths Pilot Plant. During the quarter, the company spent approximately $1.8 million on production and development activities.

Cash and Debt Scenarios: At the end of H1FY21, the company had cash reserve of $10.59 million, up from $6.66 million as at 30 June 2020, due to the receipt of outstanding research and development rebates. The company’s cash position was further improved in H2FY21 to $19.9 million as at 31 June 2021. As at 31 December 2020, the company had interest-bearing liabilities of ~$0.5 million.

Current Ratio Trend (Source: Analysis by Kalkine Group)

Outlook: Looking ahead, the company is focused to become a significant world producer of dysprosium, outside China. With ore sorter in-place, NTU has entered an important phase of Pilot Plant test work to commence the commercial-scale beneficiation plant feasibility study.

SWOT Analysis:

Stock Recommendation:

• The stock of NTU has provided returns of ~+8.10% in the past three months and corrected ~23.07% in the last six months.
• The stock is currently trading lower than the average 52-week price level band of $0.024 – $0.070, offering a decent opportunity for accumulation.
• Key Risks: Fluctuations in the Price of Rare Earth Minerals, Exploration Related Risk, COVID-19 Uncertainties, etc.
• Considering the company’s rising cash balance, improved H1FY21 performance, ongoing work programs at its Browns Range Project, current trading level, and key associated risks, we give a “Speculative Buy” rating on the stock at the current market price of $0.039, down by ~2.501% as on 13 August 2021.

NTU Daily Technical Chart (Source: Analysis by Kalkine Group) 

2. Linius Technologies Limited (Recommendation: Speculative Buy, Market Cap: ~$47.4 million)

June 2021 Quarter Highlights: Linius Technologies Limited (ASX: LNU) is a technology company that provides cloud-based solution that transforms static video into hyper-personalized video experiences with its world-first Video Virtualization Engine™.

During the June 2021 quarter, LNU completed trials with a leading University, with the Whizzard product being well received by the sector. The company is now focused on converting successful trials to sales. For the continued development of the LVS SaaS platform, LNU spend $637,000 during the quarter on research and development activities.

Cash and Debt Scenario: At the end of H1FY21, the company has a cash balance of $4.54 million and no debt in its balance sheet. Current ratio for H1FY21 stood at 8.79x, up from 7.38x in H1FY20.

Current Ratio (Source: Analysis by Kalkine Group)

Outlook: Looking ahead, the company is focused on developing and releasing repeatable sports products to drive their viewer engagement by providing personalised sports viewing. Further, the company is focused on working with Partners such as AWS and Swanbay who are actively introducing these Linius solutions to their clients.

SWOT Analysis: 

Stock Recommendation:

• The stock of LNU has provided returns of ~+12.50% in the past three months and corrected ~32.50% in the last six months.
• The stock is currently trading lower than the average 52-week price level band of $0.018 - $0.075.
• The newly identified target learning management systems for integration with Linius Whizzard are expected to generate additional sources of revenue in future deployments.
• Key Risks: Fluctuations in the price of rare earth minerals, exploration related risk, COVID-19 uncertainties, etc.
• Considering the company’s debt-free balance sheet, recent capital raising activities, modest outlook, current trading levels and key associated risks, we give a “Speculative Buy” rating on the stock at the market price of $0.027, as on 13 August 2021, 3.30 PM (GMT+10), Sydney, Eastern Australia.

LNU Weekly Technical Chart (Source: Analysis by Kalkine Group) 

3. JCurve Solutions Limited (Recommendation: Speculative Buy, Market Cap: ~$19.70 million)

FY21 Results Highlights: JCurve Solutions Limited (ASX: JCS) is a cloud solutions technology company that utilises the power of cloud technology to help customers make lasting, substantial improvements to their performance.

• As per the preliminary unaudited results of FY21, JCS reported EBITDA of $1.2 million and net profit before tax of $0.3 million. The revenue for FY21 stood at $10.6 million, down from $11.2 million in FY20. The company achieved a cash flow positive result for FY21 with operating cash inflows of $1.8 million.

EBITDA and NPBT (Source: Analyses by Kalkine Group)

• Rising Cash Balance: As at 30 June 2021, the company had a cash balance of $5.1 million, up from $4.2 million as of 30 June 2020.
• Outlook: The company has increased its sales and marketing efforts in Asia with the employment of two Business Development Managers in the Philippines. As a result of the acquisition and integration of the Creative Quest business, the company has now established itself as the digital transformation partner of choice for businesses across Asia Pacific.

SWOT Analysis:

 Stock Recommendation:

• Over the last three months, the stock has provided a return of ~7.14%
• The stock is trading above its average 52-weeks’ price level band of $0.023 - $0.070
• On a TTM basis, the stock is trading at a price to book multiple of 4.1x, lower than the industry (Software & IT Services) median of 4.7x, implying undervaluation.
• Moving forward, JCS expects to generate improved earnings, supported by its strong underlying business.
• Key Risk: Change in Cloud-based Technology, COVID-19 uncertainties, etc.
• Considering the improved financial results in FY21, rising cash balance, valuation on TTM basis, modest outlook and associated key risks, we give a “Speculative Buy” recommendation on the stock at the closing price of $0.058, as on 13^th August 2021, 3:30 PM (GMT+10), Sydney, Eastern Australia.

JCS Weekly Technical Chart (Source: Analysis by Kalkine Group)

Note 1: The reference data in this report has been partly sourced from REFINITIV.

Note 2: Investment decision 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 Valuation has been achieved and subject to the factors discussed above. 

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.

---

Disclaimer - This report has been issued by Kalkine Pty Limited (ABN 34 154 808 312) (Australian financial services licence number 425376) (“Kalkine”) and prepared by Kalkine and its related bodies corporate authorised to provide general financial product advice. Kalkine.com.au and associated pages are published by Kalkine.

Any advice provided in this report is general advice only and does not take into account your objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your objectives, financial situation and needs before acting upon it.

There may be a Product Disclosure Statement, Information Statement or other offer document for the securities or other financial products referred to in Kalkine reports. You should obtain a copy of the relevant Product Disclosure Statement, Information Statement or offer document and consider the statement or document before making any decision about whether to acquire the security or product.

You should also seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice in this report or on the Kalkine website. Not all investments are appropriate for all people.

The information in this report and on the Kalkine website has been prepared from a wide variety of sources, which Kalkine, to the best of its knowledge and belief, considers accurate. Kalkine has made every effort to ensure the reliability of information contained in its reports, newsletters and websites. All information represents our views at the date of publication and may change without notice.

Kalkine does not guarantee the performance of, or returns on, any investment. To the extent permitted by law, Kalkine excludes all liability for any loss or damage arising from the use of this report, the Kalkine website and any information published on the Kalkine website (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine hereby limits its liability, to the extent permitted by law, to the resupply of services.

Please also read our Terms & Conditions and Financial Services Guide for further information.

On the date of publishing this report (referred to on the Kalkine website), employees and/or associates of Kalkine do not hold interests in any of the securities or other financial products covered on the Kalkine website.