Jupiter Mines Limited

JMS Details

Director’s Interest Notice: Jupiter Mines Limited (ASX: JMS) is engaged in the operation of the Tshipi Manganese Mine in South Africa and the sale of manganese ore. Recently, the company informed the market that Scott Winter had acquired 215,000 ordinary fully paid shares for a consideration of $50,525.

Q4FY22 & FY22 Financial and Operational Highlights: For the quarter that ended 28 February 2022 (Q4FY22), the company recorded production and sale of 775,114 and 752,518 tonnes, respectively.

• JMS achieved graded ore mining of 244,259 bcm, and overall total in-situ movement for the quarter was 2.3 million bcm.
• The company closed the quarter with an attributable cash balance of $75 million as compared to $76 million at the end of Q3FY22.
• For FY22, the company recorded 3.3 million tonnes sold and 3.7 million tonnes produced. The EBITDA and NPAT for FY22 came in at $139.1 million and $85.7 million, respectively.

Total Production Highlight (Source: Analysis by Kalkine Group)

Key Risks:  JMS’s financial results could be impacted by the extreme change in the climate. The company’s performance could also be impacted by an adverse change in the commodities prices in which it deals.

Outlook: The company believes that the production is on track to meet the high-grade logistics and sales plan. The manganese market remained stable, and strengthened in the latter half of February 2022, after the Chinese Spring Festival and remained robust throughout March 2022. JMS expects an increase in Chinese steel production in the coming year, and reduced freight costs.

Valuation Methodology: P/E Multiple Based Relative Valuation (Illustrative) 

Source: 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: The stock of JMS is trading below its 52-week low-high average of $0.180 - $0.315, respectively. The stock has been corrected by ~13.99% in the past one month. The stock has been valued using a P/E multiple-based illustrative relative valuation and arrived at a target price of low double-digit upside (in % terms). The company can trade at some discount to its peers, considering COVID-19 led uncertainties, a decline in total production in Q4, etc. For the purpose of valuation, peers such as Macmahon Holdings Ltd (ASX: MAH), Aurelia Metals Ltd (ASX: AMI), and DDH1 Ltd (ASX: DDH) have been considered. Considering the expected upside in valuation, decent liquidity position, improvement in terms of LTIFR, decent long-term outlook, current trading levels, and key risks associated with the business, we recommend a ‘Speculative Buy’ rating on the stock at the closing market price of $0.215, up by ~2.38% as on 24 May 2022. Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

JMS Daily Technical Chart, Data Source: REFINITIV 

BSA Limited

BSA Details

A Quick Look at 1HFY22 Key Results: BSA Limited (ASX: BSA) provides contracting services to telecommunications, utility infrastructure, and building property. It offers its services in BSA Communications & Utility Infrastructure (CUI) and BSA Advanced Property Solutions (APS).

• The company’s CUI business unit recorded revenue of $122.5 million in 1HFY22, up $17.25 million from 1HFY21, owing to increased volumes from nbn compared to 2021.
• The company’s APS business unit achieved 1HFY22 revenue of $95.1 million against $107.899 million reported in the year-ago period. The decline in segmental revenues was due to impacts from Fire Build contracts and Special Projects and delays at the beginning of new contracts.
• As at 31 December 2021, BSA’s net debt stood at $5.08 million, compared to a net cash position of $11.9 million at the end of pcp, owing to negative operating cash flow in 1HFY22 and the negative impact of COVID-19 restrictions. The cash balance came in at $3.4 million as of December 31, 2021, compared to $12.82 million as of June 30, 2021.

Financial Snapshot (Analysis by Kalkine Group)

Key Risks: BSA’s revenue was impacted by changes in government spending on infrastructure. The high cost of legal compliances, delivery model moderation, and M&A expenses may deteriorate the cash position.

Outlook: The company expects higher gross margins in FY22, owing to favourable product mix, with no additional Class Action expenditure. The company has consistent working capital and liquidity to pay obligations in the near-term. BSA is progressing towards its 3-year revenue target of $750 million with tech enabled solutions in buildings and infrastructure space.

Stock Recommendation: The stock of BSA has been corrected by ~54.97% in the past three months. The stock is trading below to its average of the 52-weeks’ low-high price band of $0.077-$0.305. On a TTM basis, the stock appears to be undervalued with an EV/Sales multiple of 0.1x as compared to the industry median of 1.4x (Industrials).  Considering the contract wins, decent long-term outlook, valuation on TTM basis, current trading levels, and key associated business risks, we give a ‘Speculative Buy’ rating on the stock at the closing market price of $0.078, down by ~2.5% as of 24 May 2022. Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

BSA 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

Disclaimer - This report has been issued by Kalkine Pty Limited (ABN 34 154 808 312) (Australian financial services licence number 425376) (“Kalkine”) and prepared by Kalkine and its related bodies corporate authorised to provide general financial product advice. Kalkine.com.au and associated pages are published by Kalkine.

Any advice provided in this report is general advice only and does not take into account your objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your objectives, financial situation and needs before acting upon it.

There may be a Product Disclosure Statement, Information Statement or other offer document for the securities or other financial products referred to in Kalkine reports. You should obtain a copy of the relevant Product Disclosure Statement, Information Statement or offer document and consider the statement or document before making any decision about whether to acquire the security or product.

You should also seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice in this report or on the Kalkine website. Not all investments are appropriate for all people.

The information in this report and on the Kalkine website has been prepared from a wide variety of sources, which Kalkine, to the best of its knowledge and belief, considers accurate. Kalkine has made every effort to ensure the reliability of information contained in its reports, newsletters and websites. All information represents our views at the date of publication and may change without notice.

Kalkine does not guarantee the performance of, or returns on, any investment. To the extent permitted by law, Kalkine excludes all liability for any loss or damage arising from the use of this report, the Kalkine website and any information published on the Kalkine website (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine hereby limits its liability, to the extent permitted by law, to the resupply of services.

Please also read our Terms & Conditions and Financial Services Guide for further information.

On the date of publishing this report (referred to on the Kalkine website), employees and/or associates of Kalkine and its related entities do not hold interests in any of the securities or other financial products covered on the Kalkine website unless those persons comply with certain safeguards, procedures, and disclosures.

Kalkine Media Pty Ltd, an affiliate of Kalkine Pty Ltd, may have received, or be entitled to receive, financial consideration in connection with providing information about certain entity(s) covered on its website.