Norwest Energy NL

Norwest Energy NL (ASX: NWE) is an Australian oil and gas exploration company. NWE is engaged in the business of exploring as well as developing the petroleum resources of the Perth Basin, Western Australia. It holds an extensive portfolio of exploration permits, both onshore and nearshore.

Financial and Operational Update: On 6 January 2022, the company updated the operations at the Lockyer Deep-1 conventional gas discovery well. The company mentioned that the Cement Bond Log (CBL) and Vertical Seismic Profile (VSP) were acquired in late December 2021. As per CBL the remedial cementing operations have attained a pleasing cement job that met expectations. The company further intends to perforate the well for the testing operation that will be commenced after the well test equipment package is available.

On 15 November 2021, the company announced that it had revised its interpretation of the available seismic data following incorporating the recently reprocessed seismic data and Lockyer Deep-1 well data. The updated structural mapping revealed an increase in the potential resource area by 40%, to approximately 92 km².

On the financial front, the net loss of the consolidated entity stood at $445.26k for the year ended 30 June 2021, lower than the prior year's loss of $7,846.20k. At the end of 30 June 2021, the company had cash reserves of $3.5 million.

Technical Analysis:

Monthly Price Chart

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

On monthly chart, NWE price broke the downward sloping trend line resistance at AUD 0.030 and the prices are sustaining above the same from past 4 trading days, further indicating positive trend for the stock prices. RSI (14-period) is hovering at ~76 on a monthly chart that indicates positive price momentum. Immediate support levels are AUD 0.027 and AUD 0.025 while immediate resistance levels are AUD 0.039 and AUD 0.042.

Stock Recommendation

The company is well funded with the cash and future options to assist the next 12 months of the testing and appraisal program. The testing operations are pending at the Lockyer Deep-1 conventional gas discovery well, and the Operator Energy Resources Limited aims to start operations before the end of February 2022.

Therefore, considering the facts above and the current trading levels, we give a “Speculative Buy” recommendation on the stock at the closing market price of A$0.032 as of 21^st January 2022.

Capral Limited

Capral Limited (ASX: CAA) produces a wide range of aluminium products and systems and distributes them through two channels. The company supplies its products in three market segments: Residential, Commercial, and Industrial.

Financial and Operational Update: On 16 December 2021, the company upgraded its guidance for FY21. It expects to achieve trading EBITDA of ~$37 million in FY21, up $5 million on previous guidance. EBITDA is anticipated to be circa $58 million. The manufacturing and distribution facilities continue to operate at full capacity, resulting in higher operating leverage and improved earnings. Moreover, the company anticipates enhanced market conditions in H1FY22.

On financial front, on 25 August 2021, the company announced its financial results for the six months that ended on 30 June 2021 (H1FY21). The trading EBITDA stood at $15.7 million in H1FY21 versus $5.8 million in H1FY20, mainly due to 34% higher sales revenue. EBITDA stood at $26.2 million in H1FY21 versus $17.0 million in H1FY20. The balance sheet remains strong as net cash stood at $33.8 million as of 30 June 2021, after a $7.5 million dividend payment ($5.4 million net after DRP) and a $10.3 million capacity acquisition in H1FY21. Also, it renewed its finance facility with ANZ Bank to 30 April 2023.

Technical Analysis:

Weekly Price Chart

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

On the weekly chart, CAA prices are trading in a rising channel pattern and facing resistance of the upper band of the pattern. Moreover, the momentum oscillator RSI (14-period) is trading at ~60.61 level and formed a negative divergence, indicating the possibility of correction in the price. However, the prices are trading above the trend-following indicators 21-period and 50- period SMA, which may act as a support level for the stock.  An important support level for the stock, is placed at AUD 8.35 while the key resistance level is placed at AUD 10.08.

Stock Recommendation

The company increased its market share against imports. Also, the acquisition of the extrusion plant at Smithfield (NSW) was completed and successfully integrated with the extrusion manufacturing network. The company anticipates improved earnings in future periods. However, high competition and the economic slowdown could disrupt the company's growing momentum.

Therefore, considering the facts above and the current trading levels, we give a “Watch” recommendation on the stock at the closing market price of A$9.07, down 1.091% as of 21^st January 2022.

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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