Silver Mines Limited

 

SVL Details
 
Tuena Gold Project Update: Silver Mines Limited (ASX: SVL) is involved in the exploration for silver-rich deposits in Australia and overseas. The company has a market capitalisation of ~$109.94 million as on 22 May 2020. Recently, the company provided an update on its activities relating to exploration at the Tuena Gold Project, which is situated in New South Wales. The company received three new mineral exploration licenses at Tuena, thereby increasing the total holdings to 747 square kilometres, up from the previous 178 square kilometres. The company further plans to expand its exploration activities, which includes drilling actions to commence in the 2QFY20, subject to approvals.
 
COVID-19 Update: During the March 2020 quarter, the company took necessary measures to curb the impact of the COVID-19 pandemic. The Company’s main concern is to safeguard the well-being and health of its staff, contractors, and local communities, while maintaining the positivity of the business. The company continues with its drilling and field activities within the Bowdens Silver area. However, proposed near-term field activities at the regional Barabolar and Tuena projects have been put on hold.
 
1HFY20 Performance Highlights: For 1HFY20, the company reported total revenues of ~$64K, as compared to $126K reported in the year-ago period. Loss from continuing operations after tax amounted to $882.9k, as compared to a loss of $929K reported in the year-ago period. Cash outflow from operating activities came in at $872.8K as compared to cash outflow of $1.9 million in the year-ago period. The company exited the period with cash and cash equivalent of $7.3 million. During 1HFY20, the company continued with the completion of the Environmental Impact Statement (‘EIS’) for the planned expansion of the Bowdens Silver Project. The drilling program consisted up to a total of 4,000 metres to test the gravity high and lows for porphyry and insensitive sources. Exploration work is continued to expand at the Barabolar project area with a regional soil sampling program completed in the west of the Mt Laut Pyrophyllite alteration zone, and west of the Cringle Prospect.
 

1HFY20 Key Highlights (Source: Company Reports)
 
Stock Recommendation: As per ASX, the stock of SVL gave a substantial return of 47.06% in the last one month and a return of 220.51% in the past one year. During 1H20, gross margin of the company stood at 62.5%, higher than the industry median of 47.1%. In the same time span, current ratio of the company was 3.81x as compared to the industry median of 1.81x. The stock is inclined towards its 52-week high level of $0.155 and is indicating a good time for the investors to book profits. Considering the returns in the past three months and current trading levels, we recommend a ‘Sell’ rating on the stock at the current market price of $0.125 as on 22 May 2020.

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

Funtastic Limited

 

FUN Details

A look at FUN’s Interim results for the period ended 31 January 2020: Funtastic Limited (ASX: FUN) is engaged in wholesale trade and builds and distribute toys, sporting, confectionery, and homeware products, on a global basis. The company has a market capitalisation of ~$5.01 million as on 22 May 2020. In terms of financial performance, the company reported revenues from continuing operations of $16.4 million, up from $16.1 million, reported in the year-ago period. Revenues include ~$9.47 million sale from its largest customers. Net loss from ordinary activities stood at $4.2 million, as compared to a profit of $14.3 million reported in the year-ago period.
 

Key Highlights (Source: Company Reports)
 
Balance Sheet Details: The company exited the period with cash balance of $209K, and total borrowings amounting to $900K. As at 31 January 2020, the company’s net liabilities stood at ~$4.8 million. Non-current liabilities stood at $7.7 million, which consisted of a long-term loan of ~$7 million with no agreements, due in 2023.
 
Cash flow Details: Net cash used in operating activities stood at $2.5 million in 1HFY20, as compared to net cash outflow of $4.5 million in 1HFY19. The company recorded net cash providing by financing activities of $2.3 million in 1HFY20, down from $4.4 million recorded in 1HFY19.
 
Stock Recommendation: As per ASX, the stock of FUN gave a negative return of 16% in the last three months. The stock is inclined towards its 52-week low level of $0.007. The outlook for the 2HFY20 remains uncertain given the impact of COVID-19 led crisis. The company has taken all necessary measures to retain the essential procedures to protect the health and safety of its employees and will continue to do so. The material impact of the virus remains unknown on the retail customers, but the company remains on track to implement cost-cutting initiatives so that the company comes out to be stronger once the restrictions due to the coronavirus are lifted. Considering the negative returns in the past six months, softer market conditions due to the global pandemic, we suggest investors to book profit and recommend a ‘Sell’ rating on the stock at the current market price of $0.022, up by 4.762% on 22 May 2020.

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

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