Stocks’ Details
 

NEXTDC Limited

Completed Institutional Placement: NEXTDC Limited (ASX: NXT) is engaged in the establishment, development and operation of data centre facilities. The market capitalisation of the company stood at $3.17 Bn as on 3^rd April 2020. NEXTDC recently wrapped its institutional placement through the issue of 86.1 million new shares and raised funds of around $672 million. The company has issued shares at a price of $7.80 per share, which reflects a discount of 9.4% to the 5-day VWAP and a 15.0% discount to the last close.


Capital Raising and Uses (Source: Company Reports)

Reiterated Guidance for FY20: On 19 March 2020, the company provided an update in which it assured that it has not experienced any material impact on its sales pipeline due to uncertainty arising from COVID-19.NEXTDC also reaffirmed its FY20 guidance as per which it expects revenue to be between $200 million to $206 million in FY20 and anticipates underlying EBITDA to be in the range of $100 million to $105 million.

Stock Recommendation: NXT also reiterated capital expenditure guidance of $320 million - $340 million for FY20. The current ratio of the company stood at 3.42x in 1H FY20 as compared to the industry median of 2.26x. This reflects that NEXTDC is in a decent position to address its short-term obligations against the broader industry.  Gross margin and EBITDA margin of the company stood at 76.6% and 54.1% in 1H FY20, as compared to the industry median of 74.8% and 28.8%. Therefore, considering the decent liquidity position, improved key margins and decent FY20 guidance, we maintain a “Hold” rating on the stock at the current market price of $9.200 per share, up by 0.218% on 3^rd April 2020.

Galan Lithium Limited

Proposal for Capital Raising: Galan Lithium Limited (ASX: GLN) is involved in the exploration for lithium and other metals. The market capitalisation of the company stood at $23.58 Mn as on 3^rd April 2020. Recently, the company has announced a capital raising of $550,000 through a fully subscribed private placement at a price of 14 cents per share, which reflects a discount of 3.6% to the last closing price. It has received firm commitments from professional and sophisticated investors and others for the same. It will utilise the funds for continuing scoping and Pre-Feasibility studies (PFS), the commencement of further resource work as well as for working capital purposes. The below picture gives an overview of the consolidated financial statement:


Financial Overview (Source: Company Reports)

Future Aspects of GLN: The company continues the strategy for the advancement of shareholders’ interests and asset values via well-defined work programme on the tenements of GLN. It will also work to implement a growth strategy in order to seek out further exploration, acquisition and joint venture opportunities.

Stock Recommendation: Asset to equity of the company stood at 1.03x in 1HFY20 as compared to the industry median of 1.75x. Its debt to equity stood at nil in 1H FY20 against 0.22x of the industry median. As per ASX, the stock of GLN has corrected -44.23% and -30.12% during the span of one month and six months. Hence, considering the aforesaid facts and uncertainty in the market due to COVID-19, we have a watch stance on the stock at the current market price of $0.155 per share, up 6.897% on 3^rd April 2020.

Aeris Environmental Ltd

Experiencing Robust Demand for Products: Aeris Environmental Ltd (ASX: AEI) is in the development and sale of products to eliminate biofilm growth in air conditioning systems and water treatment systems. The market capitalisation of the company stood at $109.07 Mn as on 3^rd April 2020. AEI recently announced that it has received firm commitments from institutional and sophisticated investors in order to raise an amount of $12,040,000, before costs. The company will place 28 million new fully paid ordinary shares at $0.43 per share. Aeris would utilise the net proceeds from the placement for supporting growth in its manufacturing and supply chain capability. It will also use the funds for the expansion of its resources to grow the international distribution network.

Due to rising fear of COVID-19, AEI is witnessing unprecedented demand from multiple local and global customers, distributors and governments for hard surface disinfectants with residual properties, skin sanitisers, air-conditioning protection, and a range of environmental hygiene cleaners and treatments.


Sales Revenue (Source: Company Reports)

Positioned as Emerging Global Leader: The company is currently positioned as the emerging technology leader as well as a trusted brand in its rapidly expanding global footprint. AEI continues the practice of expanding its manufacturing, supply chain and in-market capability for supporting a growing list of customers worldwide.

Stock Recommendation: Current ratio of the company stood at 6.48x in 1H FY20 as compared to the industry median of 1.73x, which reflects that AEI is in a decent position for settling its short-term obligations. As per ASX, the stock is trading closer to its 52-week higher levels. Hence, considering the aforesaid facts, we have a watch stance on the stock at the current market price of $0.630 per share, up 23.529% on 3^rd April 2020, owing to the recent capital raising announcement. 

 
Comparative Price Chart (Source: Thomson Reuters)

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