HRL Holdings Limited

HRL Details

Appointment of Alternate Director: HRL Holdings Limited (ASX: HRL) is engaged in the provision of environmental and laboratory services with operations in Australia and New Zealand. The company has recently updated that Mr Edmon Odza has been appointed as an alternate Director for Non-Executive Director Mr Alex White effective from 30 November 2021.

AGM Update:

On 20 October 2021, the company has held its AGM meeting and has also provided a trading update.

• The Group has marked an improvement in financial performance in FY21, with revenue up by 5.5% to $34.6 million, owing to an improvement in business conditions in H2FY21.
• EBITDA also witnessed an uptick of 11% to $7.7 million with decent margins of 22%.
• Underlying NPAT grew by 27.7% to $3.2 million in FY21, compared to $2.5 million in FY20.
• The net debt position of the company stood at $0.4 million as of FY21 end.

Revenue Trend (Source: Analysis by Kalkine Group)

Key Risks: The Group’s line of business makes it prone to credit risk, as any default on obligations by a counterparty might impact the financials of the company.

Outlook: The group expects to utilise its operating cash flows in order to accelerate organic growth in laboratory technologies, as well as invest in the Software Division for management of client data. Further, it will look for inorganic growth opportunities through the acquisition of high-quality businesses within the food, agriculture and environmental services sectors.

Valuation Methodology: EV/Sales based Relative Valuation Method (Illustrative) 

Data Source: Refinitiv, Thomson Reuters, Analysis by Kalkine Group

*% Premium/(Discount) is based on our assessment of the company’s NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

Stock Recommendation: In the last six months, HRL corrected by ~11.99%. The stock is currently trading below the average 52-week price level range of ~$0.107-~$0.145. The stock has been valued using the EV/Sales multiple-based illustrative relative valuation method and arrived at a target price of low double-digit upside (in % terms). The company can trade at a slight premium as compared to its peers, considering decent financial performance, and optimistic outlook. For this purpose, peers such as Cleanaway Waste Management Ltd (ASX: CWY), Brambles Ltd (ASX: BXB), Adbri Ltd (ASX: ABC) have been considered. Considering the current trading levels, indicative upside in valuation, impressive financial performance, optimistic outlook, along with key risk associated with the business, we give a “Speculative Buy” recommendation on the stock at the closing price of $0.110 as on 03 December 2021.

HRL Daily Technical Chart, Data Source: REFINITIV 

OncoSil Medical Ltd

OSL Details

Business Update: OncoSil Medical Ltd (ASX: OSL) is engaged in the development & commercialisation of its product candidate, the OncoSil™. As per a recent update, the company has appointed Professor Ricky Sharma to the company’s board as a Non-Executive Director commencing 1 November 2021.

Update on Quarter Ended 30 September 2021:

• The company has filed an HDE application with the US FDA for the usage of OncoSil device in the treatment of distal cholangiocarcinoma.
• The commercial team have started working in targeted sites with local regulatory & Osprey ethics approvals, after the reopening of EU and UK after COVID.
• The company ended the period with a cash balance of $9.56 million as of 30 September 2021.
• It incurred an outflow of $2.7 million from operations during the period, with $0.8 million invested in R&D activities.

Revenue Trend (Source: Analysis by Kalkine Group)

Key Risks: The company’s line of business makes it prone to prudent regulatory measures and approvals, which can have an impact on its business flow.

Outlook: The company continues to engage with hospitals in the APAC region, where its device is approved and accepted. It is also in the middle of negotiations with hospitals in Singapore, Hong Kong and New Zealand with regards to obtaining registry approvals, further augmenting patient treatments and revenue growth.

Stock Recommendation: In the last six months, OSL corrected by ~33.84%. The stock is currently trading below the average 52-week price level range of ~$.041-~$0.150. On a TTM basis, the stock of OSL is trading at a P/BV multiple of 2.8x, lower than the industry median (Healthcare) of 3.6x. Considering the current trading levels, valuation on TTM basis, engagement with hospitals in different geographies, appointment of board member, along with key risk associated with the business, we give a “Speculative Buy” recommendation on the stock at the closing market price of $0.042 as on 03 December 2021.

OSL Daily Technical Chart, Data Source: REFINITIV 

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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