Stocks’ Details

Money3 Corporation Limited

Decent Growth in Loan Book: Money3 Corporation Limited (ASX: MNY) is a specialist non-bank finance provider, which provides automotive finance for the purchase and maintenance of the vehicle. The market capitalisation of the company stood at $487.52 million as on 17^th November 2020. For the year ended 30^th June 2020, the company reported revenue amounting to $124.0 million, reflecting a rise of 35.3% (YoY). In addition, the company recorded a growth of 16.4% in the loan book to $433.8 million. This was supported by stronger cash collections and lower than expected new loan origination due to COVID-19, and tightened lending criteria. The company noted a statutory NPAT of $24.2 million during FY20, up 14.2% on FY19.

Key Financials (Source: Company Reports)

Outlook: Looking forward, the company is focused on increasing its market share of the existing, highly profitable portfolio of receivables, in the vehicle finance market. The company is scheduled to conduct its Annual General Meeting on 27^th November 2020.

Valuation Methodology: Price to Earnings Multiple Based Relative Valuation (Illustrative)

Price to Earnings Multiple Based Relative Valuation (Source: Refinitiv, Thomson Reuters)

Note: All the forecasted figures are taken from Thomson Reuters, NTM: Next Twelve Months

Stock Recommendation: The group possesses funding of around ~$65 million and significant headroom in debt covenants. The 52 -week low-high range for the stock stands at $0.670 - $3.04, respectively. We have valued the stock using the price to earnings multiple based illustrative relative valuation method and arrived at a target price with the correction of low double-digit (in percentage terms). In addition, we have considered 14-day RSI and default values have been used. After careful consideration, it was observed that the stock is currently in the overbought zone. Hence, we expect a marginal fall in the stock price in the coming times. On a technical analysis front, the stock of MNY has a support level of ~$2.097 and a resistance level of ~$2.746. Thus, considering the current trading level, RSI levels, and higher valuation we advise investors to book profit and give “Sell” recommendation on the stock at the current market price of $2.580 per share, down by 1.902% on 17^th November 2020.

amaysim Australia Limited

Sale of Mobile Business: amaysim Australia Limited (ASX: AYS) provides simple and transparent mobile and retail energy plans. The market capitalisation of the company stood at ~$228.71 million as of 17^th November 2020.  Recently, the company notified the market that it has reached a Share Sale Agreement with its long-term strategic wholesale partner, Optus Mobile Pty Limited for the sale of its mobile business for cash consideration of A$250 million. The business divestment follows a strategic review in order to consider options to maximise shareholder value. However, the transaction is subject to the approval of shareholders in the Extraordinary General Meeting expected to be held in January 2021. The Board of the company unanimously advised shareholders that they should vote in favour of the Mobile business Sale in the absence of any superior bid.

During FY20, AYS reported net revenue amounting to $490.5 million, reflecting a fall of 3.5% over pcp. Underlying EBITDA for the period amounted to $40.1 million, down by 15.2% over FY19. However, this surpassed the FY20 guidance of $33 million to $39 million. As a result of the strength of the network supply agreement (NSA), Mobile gross margin witnessed a rise of 34.2% to 40.9% (post AASB16). As on 30^th June 2020, the total mobile subscribers grew to 1.18 million.

Net Revenue (Source: Company Reports)

Outlook: Looking forward, the company expects to witness some softening in retail channels in line with sporadic pandemic lock-down measures in different states and territories.

Valuation Methodology: Price to Earnings Multiple Based Relative Valuation (Illustrative)

Price to Earnings Multiple Based Relative Valuation (Source: Refinitiv, Thomson Reuters)

Note: All the forecasted figures are taken from Thomson Reuters, NTM: Next Twelve Months

Stock Recommendation: In the past six months, the stock of AYS has moved up by 133.33%. The 52 -week low-high range for the stock stands at $0.240 -$0.810, respectively. We have valued the stock using the price to earnings multiple based illustrative relative valuation and arrived at a target price with the correction of mid-single digit (in percentage terms). For the purpose, we have taken peers such as Macquarie Telecom Group Ltd (ASX: MAQ), Uniti Group Ltd (ASX: UWL), Vocus Group Ltd (ASX: VOC), etc. In addition, we have considered 14-day RSI and default values have been used. After careful consideration, it was observed that the stock is currently in overbought zone. Hence, we expect a marginal fall in the stock price in the coming times. On a technical analysis front, the stock of AYS has a support level of ~$0.59 and a resistance level of ~$1.016. Thus, considering the current trading level, steep price movement in the few months and RSI levels, we give a “Sell” rating on the stock at the current market price of $0.760 per share, down by 1.936% on 17^th November 2020.

Neometals Ltd

Completion of Mini Pilot Test Work Campaign: Neometals Ltd (ASX: NMT) is primarily engaged in mineral exploration and project development. Recently, the company announced that it has successfully completed its mini-pilot test work campaign on its Vanadium Recovery Project. The results of the campaign affirmed that exceptional vanadium chemical product purity (>99.5% V2O5), strong recoveries (>75%) and reduced residence time for its patent-pending hydrometallurgical process for recovering vanadium from Slag.

During Q1 FY21, the company established a 50:50 joint venture with leading German plant suppliers, SMS group, in order to commercialise Neometals proprietary lithium-ion battery recycling process. With respect to Vanadium Recovery Project, the company successfully finished grade confirmation/metallurgical sample drill program on stockpiles at SSAB Lulea steel mill.

Cash Flows (Source: Company Reports)

Outlook: The company seems well-placed to drive shareholder value via its socially and environmentally responsible development strategies

Stock Recommendation: The stock of NMT has moved up by 27.77% and 43.75% in the last three and six months, respectively. As a result, the stock is trading towards its 52-week high level of $0.250. We have considered 14-day RSI and default values have been used. After careful consideration, it was observed that the stock is currently in overbought zone. Hence, we expect a marginal fall in the stock price in the coming times. On a technical analysis front, the stock of NMT has a support level of ~$0.19 and a resistance level of ~$0.25. Thus, considering the current trading level, upside movement in the few months and RSI levels, we give a “Sell” rating on the stock at the current market price of $0.230 per share, down by 2.128% on 17^th November 2020.

Comparative Price Chart (Source: Refinitiv, Thomson Reuters)

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