Genex Power Limited

Genex Power Limited (ASX: GNX) generates and stores renewable energy in Australia and generates power through hydro, wind, and solar projects. Its flagship Kidston Clean Energy Hub, located in north Queensland, will integrate large-scale solar generation with pumped storage hydro. The Kidston Clean Energy Hub is comprised of the operating 50MW stage 1 Solar Project (KS1) and the 250 MW Kidston Pumped Storage Hydro Project (K2-Hydro) with potential for further multi-stage wind and solar projects.

Financial and Operational Update: As announced on 9 December 2021, the company executed an autobidder offtake agreement with Tesla for the battery project of the bouldercombe (50MW/100MWh). As a vital part of the Agreement, Tesla will provide a minimum level of contracted revenues to support project financing for the development of BBP. On 7 December 2021, the company highlighted that the Australian Energy Market Operator (AEMO) has completed its assessment of the Generator Performance Standards (GPS) for the bouldercombe (50MW/100MWh) battery project. Also, it issued  GPS approval for the Project by providing a letter under clause 5.3.4A and 5.3.4B of the National Electricity Rules.

Under its financial highlights, the company’s cash balance at the end of the September 2021 quarter stood at $41.8 million. Its net cash inflow from operating activities stood at $0.54 million, net cash outflow from investing activities stood at $60.10 million, and net cash inflow from financing activities stood at $55.93 million at the end of September 2021.

Valuation Methodology: EV/EBITDA Based Relative Valuation (Illustrative)

Technical Analysis

Weekly Price Chart:

Note: The purple color line in the chart depicts RSI (14-period). The sky-blue and green color lines show 50-Period SMA and 21-Period SMA respectively, while yellow color line represent the trend line.

On the weekly chart, GNX prices are sustained below the rising trend line support and face the same resistance. Moreover, the prices are trading below the trend-following indicators 21-period SMA and 50-period SMA, which may act as a resistance level for the stock. The leading indicator RSI (14-period) is trading at ~46.779 level. A critical support level is placed at AUD 0.18, while the necessary resistance level is at AUD 0.245.

Stock Recommendation

The company’s construction activities at the Kidston Pumped Storage Hydro Project (K2-Hydro) continued to ramp up, with the project remaining on budget and scheduled to be operational in late CY24. Moreover, it makes significant advancements on both the BBP and Kidston Wind Project (K3-Wind). Therefore, considering the facts above and current trading levels, we give a “Watch” recommendation on the stock at the closing market price of A$0.205, up 2.50% as of 15^th December 2021.

Hastings Technology Metals Limited

Hastings Technology Metals Limited (ASX: HAS) is a Perth-based rare earth company primed to become the world’s next producer of neodymium and praseodymium concentrate (NdPr). NdPr is a vital component used to manufacture permanent magnets required every day in advanced technology products ranging from electric vehicles to wind turbines, robotics, medical applications, and digital devices.

Financial and Operational Update: On 29 October 2021, the company provided its September 2021 quarterly report wherein it highlighted that Yangibana Rare Earths Project total ore reserve increased by 37% to 16.7Mt at 0.95% TREO. The TREO tonnes rose by 15% to 158,400t, with the volume of contained Neodymium and Praseodymium (NdPr) (the critical component in electric vehicle permanent magnets) increasing by 18% to (58,300t). The company received conditional approval from DevelopmentWA to construct the Yangibana hydrometallurgical operation an Onslow Rare Earths Plant in the Ashburton North Strategic Industrial Area (ANSIA), near Onslow. The company had a cash and equivalents balance of $102.5 million as of 30 September 2021. Its net cash outflow from operating activities stood at $1.26 million, net cash outflow from investing activities stood at $5.81 million, and net cash inflow from financing activities stood at $0.54 million as of September 2021.

Technical Analysis

Daily Price Chart:

Note: The purple color line in the chart depicts RSI (14-period). The sky-blue and green color lines show 50-Period SMA and 21-Period SMA respectively, while yellow color line represent the trend line.

On the daily chart, HAS price witnessed a breakout of an upward sloping trend line support and prices are sustaining below the trend line. Moreover, the prices are trading below the trend-following indicators 21-period SMA and 50-period SMA, which may act as a resistance level for the stock. The leading indicator RSI (14-period) is trading at ~42.644 level, indicating lack of momentum. An important support level for the stock is placed at AUD 0.195 while the key resistance level is placed at AUD 0.265.

Stock Recommendation

The company has made significant progress towards securing the project finance required to fund Yangibana’s construction, with extensive due diligence undertaken by potential lenders since late July. Therefore, considering the facts above and current trading levels, we give a “Watch” recommendation on the stock at the closing market price of A$0.230, up 4.545% as of 15^th December 2021.

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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