Galaxy Resources Limited
Trading Halt and Response to Media Speculation: Galaxy Resources Limited (ASX: GXY) is an Australia-based lithium focused resource company with a market capitalization of $1.17 Bn (as at April 30, 2018), whose securities were reported to be placed in a Trading Halt Session State at the request of the company. The reason for the trading halt was that the company expected to make a declaration with respect to a recent media speculation on its Sal de Vida lithium and potash brine project in Argentina. The stock soon started trading and rose about 6.25% on April 30, 2018 while GXY has appointed J.P. Morgan Australia Limited as its financial advisor to evaluate strategic options for Sal de Vida. The Company had earlier released a Revised Definitive Feasibility Study for Sal de Vida which supports a low cost, long life project with robust economics. According to 31 March 2018, Quarterly report, the company reported a cash balance of US$ 60.8 Mn with debt free status that will ensure to reinvest capital into operational optimisation and development activities to enhance shareholder returns. We expect that the company will regain its growth momentum on the back of rise in demand of electric vehicles in years to come. Meanwhile, the share price has fallen 19.10% in the past three months as on April 27, 2018, and we maintain our “Hold” recommendation on the stock.
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Sal de Vida Project (Source: Company Reports)
Beadell Resources Limited
Request for Suspension from Official Quotation: Beadell Resources Limited (ASX: BDR) recently informed the market about “Forfeiture of Unlisted Employee Share Options” with 1,000,000 Unlisted Employee Share Options exercisable at $0.20 and another 1,000,000 Unlisted Employee Share Options exercisable at $0.25 forfeited as per the terms and conditions. Besides this, the company requested for a voluntary suspension of the company’s securities from the commencement of trading on 30 April 2018. The voluntary suspension has been requested as the company aims to finalise negotiations with potential investors in respect of the capital raising referred to in its trading halt request dated 26 April 2018. To this, the company expects the suspension to last until the earlier of the commencement of normal trading on 7 May 2018, or the release of an announcement by the company. Meanwhile, Van Eck Associates Corporation and its associates ceased to be a substantial holder of the Group since 18 April 2018. Revenue from operation for CY17 decreased by 12% to $211.1 Mn as against $239.8 Mn in the corresponding prior year. Moreover, the company has reported loss after tax at $101.2 Mn in CY17 from profit of $22.4 Mn in CY16. We keep an eye on the stock given the recent developments.
Financial Highlights (Source: Company Reports)
Emeco Holdings Limited
Acquisition of Matilda Equipment and Equity Raising: Emeco Holdings Limited (ASX: EHL) requested that its securities be placed in trading halt on April 30, 2018; and unless ASX decides, the securities shall remain in trading halt until the earlier of the commencement of normal trading on May 02, 2018 or when the announcement is released to the market. Specifically, EHL requested that the trading halt last until the earlier of Emeco making an announcement to the market about the completion of the institutional component of the Entitlement Offer, and the commencement of trading on 2 May 2018. Meanwhile, the group updated the market that it has entered into a binding agreement to acquire Matilda Equipment for an enterprise value of A$80.0 million. The Acquisition represents a 3.3x EV / Q3 FY18 annualised operating EBITDA multiple (excluding transaction costs). This will be funded through a fully underwritten pro-rata accelerated non-renounceable entitlement offer to raise approximately A$90 million. This acquisition is conditional on completion of the Entitlement Offer and has termination rights in favour of Emeco with completion of the acquisition expected in early July 2018. The main objective of the acquisition is to strengthen the company’s balance sheet by generating cash and growing the rental fleet with late model, low-hour in-demand equipment, and enhanced market position.
Equity Raising Timetable (Source: Company Reports)
On financial front, the company revenue for the 3rd quarter of the year recorded A$101.2 Mn as against of Q2FY18, marking a solid growth of 22% on Q-o-Q basis. EBITDA grew by 15% to A$41.0 Mn in Q3FY18 as compared to previous quarter of the year. This was largely due to a full quarter contribution from Force Equipment and the ramp up of projects during the same period. With operating EBITDA doubling over the last 12 months, the group has continued its solid operational performance with further improvement to earnings, assisting with the aggressive deleveraging strategy. We expect that the company will continue to build earnings throughout the fourth quarter and into FY19 given the market conditions and an increasing pipeline of opportunities for FY19.
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