1. Horizon Minerals Limited (Recommendation: Speculative Buy, Market Cap: ~$75.25 million)

Horizon Minerals Limited (ASX: HRZ) is a gold production, development, and exploration company with high-quality projects located in the heart of the West Australian goldfields.

• Improved FY21 Results: For the year ended 30 June 2021, the company reported total revenue of $23.3 million, up from $3.1 million in FY20, supported by the production at Boorara Gold Project. The company’s net profit after tax (NPAT) for FY21 stood at $2.45 million, up from $1.04 million, driven by the growth in revenue offset by the rise in the cost of sales and exploration and evaluation expenditure.
• Cash and Debt Scenario: As at 30 June 2021, the company had cash and cash equivalents of $11.31 million, up from $5.89 million as at 30 June 2020. At the end of FY21, the company had lease liabilities of around $0.13 million. Current ratio for FY21 stood at 13.72x, up from 1.58x in FY20. In the recent quarterly cash flow update, the company had a cash balance of $8.7 million as at 30 September 2021.

Current Ratio Trend (Source: Analysis by Kalkine Group)

• Outlook: The company’s recently acquired Cannon underground gold project potential to provide high-grade ore early in the production profile with significant growth potential in the Cannon shear zone. The company is planning to complete underground mining studies and updated Ore Reserve at the project in the December 2021 quarter. Looking ahead, the company is focused on pursuing further value accretive consolidation opportunities.

SWOT Analysis:

Stock Recommendation:

• Over the last six months, the stock has provided a return of ~17.39%.
• The stock has a 52-week high and low of $0.150 and $0.096, respectively.
• On a TTM basis, the stock is trading at a price to book value multiple of 1.2x, lower than the industry median of 2.5x (Metals & Mining), thus seems undervalued.
• Key Risks: Fluctuations in Gold Price, COVID-19 Uncertainties, Exploration-Related Risk, etc.
• Considering the company’s decent FY21 performance, expected benefits from the recently acquired Cannon underground gold project, robust balance sheet, valuation on TTM basis, and associated key risk, we give a “Speculative Buy” rating on the stock at the closing price of $0.130 as on 12 November 2021, down by ~1.89%.

HRZ Weekly Technical Chart, Data Source: REFINITIV

2. iCandy Interactive Limited (Recommendation: Speculative Buy, Market Cap: ~$57.62 million)

iCandy Interactive Limited (ASX: ICI) is involved in the development and publishing of mobile games and digital entertainment for a global audience.

• H1FY21 Result Highlights: For H1FY21, ICI reported total revenue of $925,785 from its game development and publishing arm, down from $1,038,216 in pcp, due to the declining performance of Animoca Brands Limited’s casual game portfolio. ICI posted a net loss of $1.01 million for H1FY21. In September 2021, ICI announced an on-market share buy-back, under which it is planning to buy back up to 36,000,000 ordinary fully paid shares. For September 2021 quarter, the company reported positive cash flow from operations of A$242,000, compared to the deficit of $331,000 in the previous quarter.
• Cash and Debt Scenario: As at 30 June 2020, the company had cash and cash equivalent of $9.98 million, down from $11.82 million as at 31 December 2020. At the end of H1FY21, the company had lease liabilities of $0.16 million. Current ratio for H1FY21 stood at 7.9x, up from 1.81x in H1FY20.

Current Ratio Trend (Source: Analysis by Kalkine Group)

• Outlook: Looking ahead, the company is focused on continuing with its in-house development pipeline and aggressively seeking value-adding acquisitions or partnerships. The mobile gaming sector continues to experience high growth and ICI with a portfolio of mobile games seems well placed to benefit from the rising opportunities of developing and distributing high-quality gaming experiences.

SWOT Analysis:

Stock Recommendation:

• Over the last six months, the stock has provided a return of ~27.91%.
• The stock is currently trading lower than the average 52-week price level band of $0.053 and $0.235.
• On a TTM basis, the stock is trading at a price to book value multiple of 3.6x, lower than the industry median of 4.4x (Software and IT Services).
• Key Risks: Stiff competition, Foreign Currency Risk, Technology Disruption, etc.
• Considering the company’s improved cashflows in September 2021 quarter, robust balance sheet, modest outlook, current trading level, valuation on TTM basis and key risks associated with business, we give a “Speculative Buy” rating on the stock at the current market price of $0.098 as on 12 November 2021, 11:54 AM (GMT+10), Sydney, Eastern Australia).

ICI Weekly Technical Chart, Data Source: REFINITIV 

3. OncoSil Medical Ltd (Recommendation: Speculative Buy, Market Cap: ~$38.82 million)

OncoSil Medical Ltd (ASX: OSL) is an Australian-based medical device company emphasizing on treating patients with pancreatic and liver cancer.

• FY21 Result Highlights: During FY21, the company generated modest inaugural revenue from the sale of the OncoSil™ device of ~$213k in Australia and New Zealand. OSL reported income from the Research and Development tax incentive of $1,077,202 in FY21 against $2,763,475 in 2020. OSL recorded loss amounting to $10,433,523 against $4,261,895 in FY20. For the September 2021 quarter, the company reported net cash used in operations of $2.7 million, with $0.8 million invested in R&D activities.
• Cash and Debt Scenario: As at 30 June 2021, the company had cash balance of $12.23 million, down from $20.99 million as at 30 June 2020. At the end of FY21, the company had lease liabilities of $0.48 million. Current ratio for FY21 stood at 6.39x, down from 11.08x in FY20, but higher than the industry median of 2.97x.

Current Ratio Trend (Source: Analysis by Kalkine Group)

• Outlook: Looking forward, OSL is working on progressing its manufacturing capabilities, supply chain and sales and marketing infrastructure in order to obtain first commercial sales in the European Union and the UK. The company is also looking to obtain marketing approval in markets, which recognize the CE Mark.

SWOT Analysis:

Stock Recommendation:

• Over the last six months, the stock has corrected by ~40.76% and is trading lower than the average 52-week price level band of 0.041 and $0.180.
• On a TTM basis, the stock is trading at a price to book value multiple of 3.3x, lower than the industry median of 4.7x (Biotechnology & Medical Research).
• Key Risks: Regulatory Risks, Failure of Clinical Trials, Delay Due to COVID-19 uncertainties, etc.
• Considering the rise in FY21 revenue, modest outlook, current trading level, valuation on TTM basis and associated key risks, we give a “Speculative Buy” rating on the stock at the closing price of $0.049 as on 12 November 2021.

OSL Weekly Technical Chart, Data Source: REFINITIV

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.

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.

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