1. Meeka Gold Limited (Recommendation: Speculative Buy, Market Cap: ~$46.01 Mn)
Meeka Gold Limited (ASX: MEK) is a junior gold explorer with a portfolio of exploration projects throughout Western Australia and South Australia.
Operational Updates: Highlighted below are notable operational updates:
Business Updates (Source: Analysis by Kalkine Group)
Insights of 1HFY22: During 1HFY22, MEK released its Murchison Gold Project Scoping Study, which indicated underground mining at Andy Well, in addition to both open pit and underground mining at Turnberry. Net loss after income tax for the period amounted to ~$0.45 million against net loss of ~$0.23 million in 1HFY21. As on 31 December 2021, the company had cash and cash equivalents of ~$6.68 million as compared to ~$9.21 million as on 30 June 2021. During 1HFY22, MEK recorded a current ratio of 6.61x against the industry median of 2.10x.
Current Ratio (Source: Analysis by Kalkine Group)
Outlook: The company believes that Cascade REE Project is a significant opportunity in a forward-facing commodity market. The exploration field work aims to start REE mineralization plan in 2HFY22. In addition, Murchison Scoping Study confirmed about compelling +440koz gold development opportunity.
SWOT Analysis:
Technical Observation:
MEK price broke the downward sloping trend line by upside and the prices are sustaining above the breakout level from past nine weeks indicating positive price movement. RSI (14-day) is hovering at ~52 level that indicating positive price momentum. Immediate support levels are AUD 0.043 and AUD 0.038 while immediate resistance levels are AUD 0.062 and AUD0.066.
Stock Recommendation:
- During the past nine months, the stock has corrected by ~8.93% and is just recovered from its 52-week low level of $0.035.
- Key Risks: COVID-19 Led Uncertainties, Commodity Price Risk, Forex Headwinds, etc.
- Considering the decent growth in projects, attractive scoping study results, decent liquidity position, current trading level, technical levels mentioned above, and key risks associated with the business, we give a “Speculative Buy” rating on the stock at the closing market price of $0.050, as on 08 April 2022.
MEK Daily Technical Chart, Data Source: REFINITIV
2. Kalina Power Limited (Recommendation: Speculative Buy, Market Cap: ~$42.32 Mn)
Kalina Power Limited (ASX: KPO) is a clean-tech company which is involved in the deployment of the Kalina Cycle technology internationally and the management of its projects and investments.
1HFY22 Operational and Financial Highlights: During the half-year, the company experienced an improvement in a total loss to ~$2.58 million as compared to a net loss of ~$4.46 million in 1HFY21. During the period, it was focused on the development of its flagship 64MW primary site (the Kalina Energy Centre). KPO raised $9.940 million via an oversubscribed placement supported by a range of new institutional and sophisticated investors. The company would primarily use funds to advance Saddle Hills through to FNTP as well as for working capital requirements. At the end of 1HFY22, the company had a cash balance of ~$4.68 million against ~$1.09 million as on 30 June 2021. During 1HFY22, KPO recorded a current ratio of 10.93x against the industry median of 0.63x.
Current Ratio (Source: Analysis by Kalkine Group)
Outlook: With respect to Saddle Hills Project, the company has scheduled detailed engineering, and equipment procurement in Q1FY22- Q3FY22 and construction to take place between Q4FY22 to Q1FY24. The commercial operation of the project has been planned for Q2FY24.
SWOT Analysis:
Stock Recommendation:
- During the past six months, the stock has corrected by ~9.09% and is just recovered from the 52-week low level of $0.017, offering a decent opportunity for accumulation.
- On a TTM basis, the stock is trading at a P/BV multiple of 4.5x against the industry median (Electric Utilities & IPPs) of 5.5x.
- Key Risks: COVID-19 Led Uncertainties, Competition from Peers, Regulatory Risk, etc.
- Considering the improvement in losses, rising cash position, decent liquidity position, current trading level, and key risks associated with the business, we give a “Speculative Buy” rating on the stock at the closing market price of $0.029, up by ~3.571% as on 08 April 2022.
KPO Daily Technical Chart, Data Source: REFINITIV
3. Cellnet Group Limited (Recommendation: Speculative Buy, Market Cap: ~$8.76 million)
Cellnet Group Limited (ASX: CLT) is involved in the sourcing of products and the distribution of market- leading brands of lifestyle technology products into retail and business channels in Australia and New Zealand.
1HFY22 Financial and Operational Highlights: With effect from 1 April 2022, Vinci Brands has amended its distribution arrangements with Cellnet to exclude Australian retail and online, engaging other distributors for these specific channels. During the half-year (1HFY22), CLT posted revenue amounting to $43.67 million against $56.46 million in 1HFY21. It witnessed a rise of 21% in online sales over pcp. The company recorded an EBITDA of $1.6 million in spite of numerous ongoing retail headwinds caused by COVID-19 restrictions in Australia and New Zealand. The company declared an interim dividend of $0.003 per share. At the end of the half, the company had a cash balance of $6.2 million. During 1HFY22, CLT posted a current ratio of 1.70x against 1.58x in 1HFY21.
Liquidity Profile (Source: Analysis by Kalkine Group)
Outlook: The company believes that its partnership with Queensland based Renewable Mobile Group would help the company for expansion in the New Zealand market in the upcoming quarter. In addition, it would continue to focus on enhancing the execution of its growth strategies across gaming, refurbished devices, mobile accessories, and online distribution.
SWOT Analysis:
Stock Recommendation:
- During the past three months and six months, the stock has corrected by ~53.74% and ~43.07%, respectively and is trading near to its 52-week low level of $0.034, offering a decent opportunity for accumulation.
- CLT has an EV/Sales multiple of 0.2x against the industry median (Specialty Retailers) of 1.1x on a TTM basis. Thus, it can be said that the stock is undervalued at the current trading levels.
- Key Risks: COVID-19-led uncertainties, demand & supply instability, loss of customers, stiff competition, etc.
- Considering the recent agreement with Renewable Mobile Group, growing online sales, decent liquidity position, current trading level, valuation on a TTM basis, and key risks associated with the business, we give a “Speculative Buy” rating on the stock at the closing market price of $0.037, up by ~2.777% as on 08 April 2022.
CLT Daily Technical Chart, Data Source: REFINITIV
Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.
Note 1: The reference data in this report has been partly sourced from REFINITIV
Note 2: Investment decisions 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 analysis has been achieved and subject to the factors discussed above alongside support levels provided.
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.
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