Clean TeQ Holdings Limited

Clean TeQ Sunrise Project Update: Up 3.2% on May 10, 2018 following a 12.9% rise in last five days, Clean TeQ Holdings Limited (ASX: CLQ) has recently announced an update on the development of the Clean TeQ Sunrise Project which is one of the world’s largest undeveloped cobalt resources outside Africa. According to the release, the Company’s technical team is making excellent progress towards completion of the Definitive Feasibility Study (DFS) for the Clean TeQ Sunrise Project, which remains on track for delivery in June 2018. Further, to enable in production rates growth, the DFS is assessing the following changes to the Project design criteria and scope such as increasing the nameplate capacity of the refinery to 7ktpa cobalt and 25ktpa nickel to maximise production optionality; incorporating improved operating flexibility into the resin-in-pulp circuit; enhancing systems and automation to allow for improved remote operability; and accessing supplemental power from the grid via a tie-line in place of a gas pipeline. We expect that these changes will have an impact on the capital cost estimates. But, it is expected that the higher revenue from increased metal production and stronger price outlook will offset any larger investment in capacity. Besides this, one of its Director Stefanie Loader, having an indirect interest in the Company acquired 50,000 shares through on-market trade, as at May 08, 2018. As of now, we continue to maintain our “Hold” recommendation on the stock at the current market price of $ 1.125, based on strong ongoing engagement with government and community stakeholders and rise in battery demand.


Rise in Battery Demand (Source: Company Reports)
 

Emeco Holdings Limited

Entitlement Offer of New Shares: Emeco Holdings Limited (ASX: EHL) announced that the group conducted an accelerated pro-rata non-renounceable entitlement offer of new fully paid ordinary shares at an offer price of A$0.25 per New Share to raise approximately A$90 million. Under the Retail Entitlement Offer, eligible Emeco shareholders are entitled to subscribe for 1 New Share for every 7.8 existing Emeco shares. The proceeds of the Entitlement Offer will be used to fund the acquisition of Matilda Equipment Holdings Pty Ltd, transaction costs associated with the Entitlement Offer and Acquisition, and working capital requirements. The retail entitlement offer will be closed on May 17, 2018 and new shares under the Retail Entitlement Offer commence trading on May 25, 2018 on the ASX on a normal settlement basis. The commencement of quotation of New Shares is subject to confirmation from ASX. Following the above development, the company has recently issued 309,604,949 new Shares under the institutional component of the accelerated pro rata non-renounceable entitlement offer. The issue date for the New Shares under the institutional component of the Entitlement Offer was May 09, 2018. Meanwhile, we maintain our “Speculative Buy” recommendation on the stock at the current market price of $ 0.300, considering the outlook ahead on the back of number of acquisitions including the purchase of industry peer Matilda Equipment, strategy which is on track to help achieve net debt to EBITDA ratio of 1.5x by FY20.


Key Dates for the Retail Entitlement Offer (Source: Company Reports)
 

Decmil Group Limited

Won a Design and Construction Contract for Waiheke Schools:Decmil Group Limited (ASX: DCG) has recently won a design and construction contract for two schools on Waiheke Island at the price of NZ$24.3 Mn. The contract includes redeveloping the Te Huruhi Primary School and the Waiheke High School. The Design work is slated to commence this month and construction is relied upon to start in the fourth quarter of FY18. On the other hand, the revenue was moderately down by 0.6% to $140.8 Mn in 1HFY18 as compared to $141.7 Mn in 1HFY17. The Company secured several new and larger contracts in the later part of 1HFY18 which is expected to contribute to strong revenue growth in the second half of the 2018 financial year and into the 2019 financial year. Gross profit stood at $19.2 Mn in 1HFY18, showing growth of 14.0% YoY along with Gross Profit margin recorded at 13.6%, gaining by 175 bps on Year-on-Year (YoY) basis. However, Net loss after tax was reported at $6.3 Mn in 1HFY18 as compared to net loss of $1.4 Mn in 1HFY17. This was majorly driven by high administrative cost and equity-based payment incurred during the aforesaid period. The administration costs for first half of the year amounted to $15.7 Mn and are expected to reduce in the second half of the 2018 financial year due to the overhead and structural rationalisation that has occurred across the Group from FY16 to 1HFY18. This together with increasing revenue levels in the business will drive an improvement in EBITDA margins in 2H FY18 and in the 2019 financial year. The Group generated positive operating cash flow in 1H FY18 of $1.7 Mn. The Group has a well diversified business portfolio, and several larger projects in the tender pipeline may see the group to continue to expand through to 2019. Based on foregoing developments, we give a “Hold” recommendation on the stock at the current market price of $ 1.190.

1HFY18 Financial Highlights (Source: Company Reports)

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