Stocks’ Details

Nickel Mines Limited

Strong Performance in 1H FY20: Nickel Mines Limited (ASX: NIC) is engaged in the production of nickel pig iron and nickel ore. The market capitalisation of the company stood at ~$1.6 Bn as on 8^th October 2020. Despite the COVID-19 crisis, the company managed to report strong financial results in 1H FY20. NIC recorded revenue amounting to US$227.8 million as compared to US$56.8 million in 1H FY19. Profit after tax for the period amounted to US$45.5 million against US$73.5 million over pcp. The company has declared an interim dividend of A$0.01 per share. During the half-year, NIC has paid US$10.0 million against the Ranger debt facility, which decreased the balance of the facility to US$45.0 million.

Key Financials (Source: Company Reports)

Future Dividend Payment: The company is planning to pay a final dividend of minimum A$0.01 per share for FY20 in the month of March 2021.

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

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

Note: All forecasted figures and peers have been taken from Thomson Reuters, NTM-Next Twelve Months

Stock Recommendation: As on 30^th June 2020, the cash balance of the company stood at US$91.2 million. In the past one and three months, the stock has provided returns of 7.14% and 25%, respectively. We have valued the stock using the P/E multiple based illustrative relative valuation method. For the purpose, we have taken peers such as Western Areas Ltd (ASX: WSA), Red River Resources Ltd (ASX: RVE), Mineral Commodities Ltd (ASX: MRC), to name few, and arrived at a target price of low double-digit upside (in percentage terms). On the technical analysis front, the stock price of NIC has a support level of ~$0.675 and a resistance level of ~$0.781. Therefore, considering the strong financial position, future dividend payment and reduction in debt facility, we give a “Hold” recommendation on the stock at the current market price if $0.770 per share, up by 2.667% on 8^th October 2020. 

Bigtincan Holdings Limited

Signed Sale and Purchase Agreement: Bigtincan Holdings Limited (ASX: BTH) is a provider of enterprise mobility software. The market capitalisation of the company stood at $508.93 Mn as on 8^th October 2020.  Recently, the company notified that it has inked a binding Share Sale and Purchase Agreement for the acquisition of 100% of the issued capital of Agnitio A/S, which would be financed through existing cash reserves. BTH would be paying an initial cash consideration of DKK 15 million. In addition, the company would also pay a conditional deferred cash consideration of up to DKK 7.5 million.

Decent Growth in Topline: During FY20, the company reported annualised recurring revenue amounting to $35.8 million, reflecting a rise of 53%. This was mainly supported by the previous investments made by the company in building out the sales and marketing capability. In addition, the company experienced a growth of 56% in revenue to $31 million.

ARR Growth (Source: Company Reports)

Guidance: For FY21, the company is expecting to report annualised recurring revenue in the range of $49-53 million and revenue in the ambit of $41-44 million.

Valuation Methodology: EV/Sales Multiple Based Relative Valuation (Illustrative)

EV/Sales 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 stock of BTH has provided a return of 16.96% and 63.03% in the past one and three months, respectively. On the technical analysis front, the stock price of BTH has a support level of ~$1.261 and a resistance level of ~$1.423. We have valued the stock using an EV/Sales multiple based illustrative relative valuation method and arrived at a target price, which is offering an upside of lower double-digit (in percentage terms). For the purpose, we have taken peers such as LiveHire Ltd (ASX: LVH), Nearmap Ltd (ASX: NEA), iSignthis Ltd (ASX: ISX) etc.  Therefore, considering the growth in revenue and ARR, agreement for acquisition and returns in the past months, we give a “Hold” recommendation on the stock at the current market price of $1.320 per share, down by 1.859% on 8^th October 2020. 

Caeneus Minerals Ltd

Capital Raising in Q1FY21: Caeneus Minerals Ltd (ASX: CAD) is involved in the exploration and development of minerals. The market capitalisation of the company stood at $47.06 Mn as on 8^th October 2020. During Q1FY21, the company finished capital raising of $500,000 through the placement of 125,000,000 fully paid ordinary shares at an issue price of $0.004 each share to sophisticated and professional investors. In addition, the company also raised $2 Million via the placement of 200,000,000 shares at an issue price of $0.01 to professional investors and clients of Shaw and Partners Limited. The company would use these funds for its exploration activities largely at its newly granted Roberts Hill tenement. For FY20, the company reported revenue amounting to $217,758 as compared to $2,460 in FY19. Net loss after tax for the year amounted to $547,531 against $2,561,253 in FY19.

Key Financials (Source: Company Reports)

Outlook: With respect to Roberts Hill and Mt Berghaus tenements, the company has finished a low level detailed airborne magnetic survey. The company is likely to begin a thorough evaluation of the total magnetic intensity data in future on the tenements.

Stock Recommendation: As on 30^th June 2020, the cash and cash equivalents of the company stood at $319,832. The stock of CAD has moved up by 84.62% and 1100% in the past three and six months, respectively. In addition, the stock is trading above its 52-week low-high average of $0.001-$0.020, respectively. On the technical analysis front, the stock price of CAD has a support level of ~$0.011 and a resistance level of ~$0.020. Thus, considering the past movement in the stock and current trading level and loss-making business, we suggest investors to avoid the stock at the current market price of $0.012 per share on 8^th October 2020.

Comparative Price Chart (Source: Refinitiv, Thomson Reuters)

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