Kingwest Resources Limited

KWR Details

Menzies Gold Resource Drilling Exceeds Expectations: Kingwest Resources Limited (ASX: KWR) is a mining company, which is engaged in the acquisition and exploration of resource projects. As on 21 October 2020, the market capitalization of the company stood at ~$35.34 million. The company has recently completed significant gold intersections in Reverse Circulation drilling at its Menzies Gold Project, wherein it completed 42 RC holes for a total of 4,004 metres. It also plans to complete 58 Resource Definition RC holes in H2 2020.

Operational and Financial Highlights: During FY20, the company completed a scoping study at the Goongarrie Lady deposit, wherein it reported Production Target of 50,000t of ore grading 3.12g/t gold and a net cash flow from the project is estimated to be in a range of $6 million to $12 million. During FY20, interest income of the company went down to $11.9k from $42.63k in FY19. In the same time span, net loss of the company went up to $5.26 million, up from $966k in FY19. As on 30 June 2020, the company reported a cash balance of $2.78 million, up from $1.85 million in FY19 and a net asset position of $13.09 million as compared to $6.67 million in the pcp.

FY20 Financial Performance (Source: Company Reports)

Stock Recommendation: As per ASX, the stock of KWR is trading close to its 52-weeks’ high level of $0.297 and seems to have reached its market potential. It seems that most of the positive factors are priced in the current stock price. The stock of KWR gave a return of 47.16% in the past three months and a return of 34.37% in the last one month. On a technical front, the stock of KWR has a support level of ~$0.19 and a resistance level of ~$0.241. Considering the current trading levels, softer market conditions due to the global pandemic and decent returns, we suggest our investors to book profit and recommend a ‘Sell’ rating on the stock at the current market price of $0.215, down by 6.522% on 21 October 2020.

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

Holista CollTech Limited

HCT Details

Temporary Restrictions on HCT: Holista Colltech Limited (ASX: HCT) is a bio-industrial company, which is committed to the development and commercialization of food ingredients and ovine collagen for cosmetic and biomedical applications. As on 21 October 2020, the market capitalization of the company stood at ~$31.66 million. The company has recently acknowledged the restrictions placed by Australian Securities and Investment Commission (AISC) to issue a reduced content prospectus and to use exemptions for reduced disclosures in fundraising documents.

Successful Testing of Path-Away Against SARS-CoV-2: The company has recently announced the results of the independent tests of Path-Away® Anti Pathogenic Aerosol Solution on SARS-CoV-2, wherein it achieved 3-Log reduction of 99.9% of the virus within two minutes on a hard surface. The company has also issued a termination letter after the breach by Skin Elements of several key conditions of the binding term sheet. Skin Elements has only fulfilled its weekly order and payment obligations until the end of May 2020.

H1FY20 Financial Highlights: During H1 FY20, the revenue of the company went down to $2.76 million from $3.36 million in H1 FY19. In the same time span, the loss for the Group after providing for income tax and non-controlling interest amounted to $4.87 million. This was due to foreign exchange losses, impairment of receivables and goodwill and disruptions in the supply chain due to the COVID-19 pandemic. During the half-year period, the cash and cash equivalents grew to $3.8 million, as compared to $101,400 as at 31 December 2019.

FY20 Financial Highlights (Source: Company Reports)

Stock Recommendation: The stock of HCT gave a return of 20% in the past three months and a return of 50% in the last one month. On a technical front, the stock of HCT has a support level of ~$0.08 and a resistance level of ~$0.12. On a TTM basis, the stock of HCT is trading at a price to book value multiple of 5.1x, higher than the industry median (Healthcare) of 3.9x, and thus seems overvalued. Considering the current trading levels, higher multiple, and softer market conditions, we suggest investors to book profit and recommend a ‘Sell’ rating on the stock at the current market price of $0.09, down by 21.740% on 21 October 2020, owing to its recent release of temporary restrictions.  

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

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