BPH Energy Ltd

BPH Details

A Quick Look at FY20 Results: BPH Energy Ltd (ASX: BPH) is engaged in the development of biomedical research and technologies. The market capitalisation of the company stood at $32.36 Mn as on 29^th September 2020. For the year ended 30^th June 2020, the company reported revenue amounting to $240k reflecting a fall of 13.7% on the previous year. Net profit after tax for the period amounted to $1,371,263 as compared to a loss of $3,013,043 in FY19. The company reported net cash outflow from operating activities of $504,295. In the month of April 2020, the company finished a 1 for 10 share consolidation. BPH has also finished non-renounceable rights issue, for which the company received a $4,001,749 application for 266,783,294 shares.

Key Financial (Source: Company Reports)

Carbon Capture and Storage Proposal: In another update, the company notified that the Baleen well program in PEP11 is offering potential environmental benefits in carbon capture and storage for the greater Sydney/Newcastle area. The company added that PEP11 provides a substantial opportunity to make a significant impact on the reduction of CO2 emissions through CCS -Carbon Capture and Storage.

Aspects: The company is focused on a strategy to ensure appropriate liquidity for anticipated operating requirements. The company is scheduled to conduct its Annual Shareholders Meeting on 27^th November 2020.

Stock Recommendation: During the last one and three months, the stock of BPH has moved up by 90.32% and 223.94%, respectively. Resultantly, the stock is inclined towards its 52-week high level of $0.063. In addition, the stock is trading at a price to book value multiple of 14.3x as compared to the industry median (Biotechnology & Medical Research) of 5.2x on TTM basis. On the technical analysis front, the stock of BPH has a support level of ~$0.050 and a resistance level of ~$0.061.  Thus, in light of past movement in the stock, current trading levels and valuation, we give an “Expensive” rating on the stock at the current market price of $0.055 per share, down by 6.78% on 29^th September 2020.

BPH Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

Paragon Care Limited

PGC Details

Long-Term Savings via Cost Out Program: Paragon Care Limited (ASX: PGC) is engaged in the supply of durable medical equipment, medical devices and consumable medical product to the health and aged care markets in Australia and New Zealand. The market capitalisation of the company stood at $54.06 million as on 29^th September 2020. During FY20, the company reported revenue amounting to $231.7 million, compared to $236.1 million in FY19, impacted by the temporary closure of hospital elective surgery as a result of COVID-19. Normalised EBITDA for the period amounted to $22.9 million against $28.3 million in FY19. During the year, the company’s management has continued to deliver significant long-term savings via the cost out program, which was commenced in FY19.

Key Metrics (Source: Company Reports)

Future Focus: The company is quickly growing its market share in A$9 billion industry, which is underpinned by its strong tailwinds. For FY21 and beyond, the company is focused on finalization of op-ex cost reduction and targeting an EBITDA margin of 15% in 4 pillars (Devices, Diagnostic, Capital & Consumables, and Service & Technology). PGC is likely to conduct its Annual Shareholders Meeting on 25^th November 2020.

Stock Recommendation: The stock of PGC has corrected by 20% and 11.11% in the last one and three months, respectively. As a result, the stock is trading towards its 52-week low level of $0.095. On the technical analysis front, the stock of PGC has a support level of ~$0.117 and a resistance level of ~$0.228.   PGC has an EV/Sales multiple of 0.6x as compared to the industry median (Healthcare) of 11.6x, on TTM basis. In addition, the stock is trading at a price to cash flow multiple of 5.4x against the industry average (Healthcare) of 24.4x on TTM basis. Thus, it seems that the stock is undervalued at current trading levels. Therefore, considering the long-term savings, future focus, current trading levels and key risks with the business, we give a “Speculative Buy” recommendation on the stock at the current market price of $0.160 per share on 29^th September 2020. 

PGC Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

Disclosure: BPH Energy Limited (Company) is a client of Kalkine Media Pty Ltd (Kalkine Media), an affiliate of Kalkine. However, under no circumstances have Kalkine or its related entities been, directly or indirectly influenced in making any related insights concerning Company as contained in this report, and no form of compensation is or will be received by Kalkine, Kalkine Media or Kalkine’s other related entities for the publication of this report.

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