Stocks’ Details

Droneshield Limited

Record Customer Cash Receipts: Droneshield Limited (ASX: DRO) is a worldwide leader in drone security technology and has developed the pre-eminent drone security solution that protects people, organizations, and critical infrastructure from intrusion. As on 14 September 2020, the market capitalization of the company stood at ~$79.58 million.

South East Asia Army Order: DRO has recently received its first order of ~$1 million for a DroneSentry^TM system for an Army of a major South East Asian country. The order is expected to be delivered in 4Q20. The company has also announced that it has received funding from the United States Department of Defense for the development of its DroneShieldComplete^TM Command-and-Control system.

Results for the Period ended 30 June 2020: During the 2Q20, the company has announced an all-time record quarter of customer cash receipts and grants of $2.1 million and reported revenue from customers of $3.07 million for 1H20, reflecting an increase of 29% on the half-year. For the half-year, the company incurred a net loss of $1.17 million.

1H20 Financial Highlights (Source: Company Reports)

Stock Recommendation: DroneShield positioned seems to be well-positioned and a leader in the space with several differentiated products. It has a high conviction and a near term pipeline of $85 million. The stock is also trading close to its 52-weeks’ low level of $0.084, proffering a decent opportunity for the investors to enter the market. On the technical analysis front, the stock has a support level of ~$0.12 and a resistance level of ~$0.36. Considering the current trading levels, growth opportunities and decent pipeline of work, we recommend a ‘Speculative Buy’ rating on the stock at the current market price of $0.200, down by 2.439% on 14 September 2020.

Kairos Minerals Limited

Improved Levels of Investment Sentiments: Kairos Minerals Limited (ASX: KAI) is engaged in the business of resource exploration and investment. As on 14 September 2020, the market capitalisation of the company stood at ~$88.78 million.

Update on Pilbara Gold Project: The company has recently announced the commencement of a major program of 5,000m of Reverse Circulation drilling at its Pilbara Gold Project in WA. The RC drilling program is designed to test targets at Mt York, Iron Stirrup and Old Faithful deposits, and the Green Creek and Zakanaka prospects.

Quarterly Activities: The company is re-evaluating several gold explorations targets on its extensive portfolio of regional gold projects. During the June quarter, the company completed a placement to raise $2.5 million and initiated a non-renounceable rights issue to raise $1.7 million. At the end of the quarter, the company reported a cash balance of $3.5 million and used $101k from operating activities.

Quarterly Cash Flow Activities (Source: Company Reports)

Stock Recommendation: The company has moved up a gear with the commencement of a 5,000m RC program across the Mt York and Croydon Projects. The stock is trading very close to its 52-weeks’ high level of $0.72 and thus retains limited potential for growth. On a Trailing Twelve Months basis, the stock of KAI is trading at a price to book value multiple of 7.6x, higher than the industry median (metals and mining) of 2.5x, and thus seems overvalued. On a technical analysis front, the stock of KAI has a support level of ~$0.052 and a resistance level of ~$0.062. Considering the current trading levels, returns in the past three months, key risks and higher P/BV multiple, we suggest investors to wait for better entry levels and, hence, give an expensive rating on the stock at the current market price of ~$0.057, down by 5% on 14 September 2020.

Twenty Seven Co. Limited

Increased Field Work and Advanced Prospects: Twenty Seven Co. Limited (ASX: TSC) is engaged in gold and copper exploration across Western Australia, New South Wales, Northern Territory and South Australia. As on 14 September 2020, the market capitalization of the company stood at ~$13.38 million.

New gold targets discovered at Rover: The company has extended its focus areas at the Harmonic and Red Bush prospects while generating new gold targets for priority follow-up. It has increased its field work, which is likely to generate a plethora of high-quality drill targets to complement its advanced prospects at Creasy 1 and Harmonic. The newly granted tenement at the Rover Project may increase the footprint by 80% to 461km². The geology team has started field mapping and sampling work on the new tenement, with the focus on the historic gold anomalies.

During the quarter, the company spent $473,000 on exploration activities, primarily on its Rover Project in WA where RC drilling. The expenditure represents direct costs associated with the drilling program, sample assays and geophysical surveys, as well as capitalized wages which can be directly attributed to exploration projects. In the same time span, the company reported a cash balance of ~$1.1 million.

Quarterly Cash Flow Activities (Source: Company Reports)

Stock Recommendation: During the period, TSC completed 14 drill-holes for 1,761m drill testing eight bedrock conductors. As per ASX, the stock of TSC is trading very close to its 52-weeks’ low level of $0.003. The stock seems to be very volatile, given its small market capitalization and the speculative nature. On the technical analysis front, the stock of TSC has a support level of ~$0.005 and a resistance level of ~$0.009. On a Trailing Twelve Months basis, the stock of TSC is trading at a price to book value multiple of 3.3x, higher than the industry median (Metals & Mining) of 2.5x, and thus seems overvalued. Considering the current trading levels, significant returns in the past three months, volatility in the market and the speculative nature of the stock, we suggest investors to avoid the stock at the current market price of ~$0.007, down by 22.222% on 14 September 2020. 

Comparative Price Chart (Source: Refinitiv, Thomson Reuters)

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