Stocks’ Details 

88 Energy Limited

Prospective Resources Report of Project Peregrine: 88 Energy Limited (ASX: 88E) is an energy company, mainly involved in the exploration and production of oil. As on 1 March 2021, the market capitalisation of the company stood at ~$109.45 million. On 23 February 2021, the company provided an Independent Prospective Resources Report for its 100% owned Project Peregrine, located in Alaska. The report has assessed over 1.6 billion barrels in the mean case (unrisked net entitlement).

The Prospective Resources at Project Peregrine (Source: Company Reports)

Completed $12 million Placement: On 12 February 2021, the company announced that it had completed a heavily oversubscribed bookbuild to domestic and international institutional and sophisticated investors to raise up to A$12.0 million before cost. The proceeds of the placement are expected to strengthen the company’s balance sheet and will provide the company with sufficient capital to finance the drilling work of Merlin-1 and Harrier-1 wells at Project Peregrine. The proceeds will also be used to fund the plugging and abandonment costs assumed with the recently acquired Umiat Oil Field.

Outlook: At the Project Peregrine, the company is scheduled to spud the Merlin-1 well in early March 2021 and is targeting 645 million barrels of mean unrisked net entitlement prospective oil resources. After completing the operations at Merlin-1, the company is scheduled to commence work at the second well, Harrier-1. With the completion of a $12 million placement in February 2021, the Company seems well-funded for all planned activity through to the end of CY21.

Stock Recommendation: Over the last three months, the stock has provided a return of 14.28%. The stock is currently trading lower than the average of its 52-weeks price band of $0.004 and $0.023, offering a decent opportunity for accumulation. On the technical analysis front, the stock has a support level of ~$0.007 and a resistance of ~$0.016. On a TTM basis, the stock is trading at a price to book multiple of 1.7x, lower than the industry average (Energy) of 8.4x, thus seems undervalued. Considering 88E’s recently completed $12 million placement, expected drilling work at Merlin-1 and Harrier-1 wells at Project Peregrine, current trading level, and valuation on TTM basis, we give a “Speculative Buy” recommendation on the stock at the current market price of $0.008, down by 11.112% as on 01 March 2021.

Note: 88 Energy Limited (Company) is a client of Kalkine Media Pty Ltd (Kalkine Media), an affiliate of Kalkine. However, under no circumstances have Kalkine or its related entities been, directly or indirectly influenced in making any related insights concerning Company as contained in this report, and no form of compensation is or will be received by Kalkine, Kalkine Media or Kalkine’s other related entities for the publication of this report.

Talisman Mining Limited

A Quick Look at H1FY21 Highlights: Talisman Mining Limited (ASX: TLM) is a mineral development and exploration company, focused on the discovery and development or commercialisation of opportunities in base and precious metals within Australia. During the half-year ended 31 December 2020, the company continued its exploration work at various projects and identified multiple exploration targets at Lachlan Copper-Gold Project. The targets have the potential to host significant gold or base metal mineralisation and warrant further exploration activities. At Blind Calf Copper-Gold Prospect, the company completed four reverse circulation (RC) drill holes. For the half-year period, the company reported net loss of $2.6 million.

H1FY21 Results (Source: Company Reports)

Outlook: After receiving encouraging results from a programme of Reverse Circulation (RC) percussion drilling at Blind Calf copper prospect, TLM is now planning to apply a systematic approach of down-hole geophysics, mapping, and structural geology to refine targeting for its next round of drilling. Currently, the company is looking for potential precious and base metal growth opportunities in Australia that could complement its existing asset portfolio.

Stock Recommendation: As at 31 December 2020, the company had cash and cash equivalent of ~$10.137 million. Over the last three months, the stock has corrected by 13.04%. The stock is trading lower than the average 52-weeks price band. On the technical analysis front, the stock has a support level of ~$0.090 and a resistance of ~$0.115. Considering the company’s low market capitalisation, absence of revenue from core operations, rise in net loss, and negative ROE, we give an “Avoid” rating to the stock at the current market price of $0.100, up by 2.04% as on 1 March 2021. We also suggest investors to keep a close eye on the company’s future exploration updates.

RooLife Group Ltd

Change of Director’s Interest: RooLife Group Ltd (ASX: RLG) is mainly involved in providing fully integrated digital marketing and customer acquisition services for its clients. The company has a track record of delivering projects for established & emerging brands. As on 1 March 2021, the company’s market capitalisation stood at ~$15.07 million. Recently, one of the company’s Directors, Warren Barry, who holds indirect interest in the company, acquired 250,000 fully paid ordinary shares in the company at the consideration of $0.025 per share via an off-market transfer.

H1FY21 Result Highlights: For the half-year ended 31 December 2021, the company reported revenue from operations and other income of $2.32 million, representing growth of 44% on pcp. The company’s product sales stood at $745k in H1FY21. Over the period, the company completed a private placement to institutional investors and completion of the Entitlement Issue and Shortfall Offer to raise a total of ~$5.788 million net of cash costs.

Revenue & Income Trend (Source: Company Reports)

Outlook: E-commerce businesses have performed resiliently during COVID-19 period with strong demand for western brands among China consumers. Looking ahead, the company is focused on creating Alipay enabled online stores to drive sales to China’s Mobile Commerce users. With a cash holing of around $5.1 million as at 31 December 2021, the company seems well-positioned for future growth. For Q3FY21, the company expects its revenue to be around $2.5 million.

Stock Recommendation: The stock has corrected by 20.93% in the last six months and is trading lower than the average 52-weeks price level band of $0.009 and $0.054. On the technical analysis front, the stock has a support level of ~$0.018 and resistance of ~$0.029. On a TTM basis, the stock is trading at a Price to Book multiple of 1.6x, lower than the industry median of 5.4x. Considering the company’s decent performance in H1FY21, expected revenue growth in Q3FY21, nil debt to equity multiple, modest outlook, current trading level and valuation on TTM basis, we give a “Speculative Buy” recommendation on the stock at the current market of $0.024 as on 01 March 2021.

Comparative Price Chart (Source: Refinitiv, Thomson Reuters)

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