iBio Inc

iBio Inc (AMEX: IBIO) is a Pharmaceuticals & Biotechnology Company. The Company is engaged in the business of developing vaccines and therapeutics for the betterment of the health of human and animal.

Investment Highlights - iBio Inc – Avoid at USD 1.47

• Despite the higher revenue, the profitability margins were impacted by higher expenses.
• In the last six months, the Company delivered a negative return of ~75.78% and delivered lower returns compared to the benchmark Index.
• As per valuation metrics, EV/Sales multiple of the iBio Inc is currently higher as compared to the corresponding multiple of the Pharmaceuticals industry, reflecting overstretched valuations.
• From the technical standpoint, 14-day RSI is supporting downward movement (around 62 level), which means the stock price could decline in the short term.

Key Risks

• The market conditions in which the Company operates is full of challenges and might impact the operational performance and reduce financial performance as well.
• Liquidity and interest rate risks could affect the operations of the Company.

Financial Highlights – Q1 FY2021 (30 September 2020)

(Source: Quarterly Report, Company Website) 

• In the first quarter of the financial year 2021, driven by higher revenue generated by two new customers, the total revenue increased to $410 thousand.
• Due to higher operating expenses for the period, the profitability margins declined and remained in the negative zone.
• The cash balance improved to $77,543 thousand as on 30 September 2020 (30 June 2020: $55,112 thousand).

One Year Share Price Chart

(Source: Refinitiv, chart created by Kalkine Group)

Conclusion

The Company has shown a decline in financial performance in the first quarter of the financial year 2021. Despite the higher top-line performance, the bottom-line performance declined and remained in the negative zone. The Company needs to manage its operating expenses effectively unless it results in further deterioration in financial performance in the coming years. IBIO in September 2020 selected IBIO-201 as a leading candidate for the prevention of covid-19 infection. Despite the impact of covid-19 on the world economy, the Company is focused on driving growth across the platform. The stock made a 52-week low and high of USD 0.2302 and USD 7.45, respectively.

Based on the above rationale, we have given an “Avoid” recommendation on iBio Inc at the closing price of USD 1.47 (as on 15 January 2021), with support from few catalysts needs to be evaluated at a later stage such as new contract signed and strong growth in revenue from CDMO (Contract Development and Manufacturing) Services.

Castor Maritime Inc

Castor Maritime Inc (NASDAQ: CTRM) is a Cyprus based dry bulk shipping Company. The Company is focused on growing business through the acquisition of modern and new vessels.

Investment Highlights - Castor Maritime Inc – Avoid at USD 0.3356

• Despite the higher revenue, the Company reported a significant decline in the profitability margins due to higher expenses incurred.
• In the last one year, the Company delivered a negative return of ~81.96% and delivered lower returns compared to the benchmark Index.
• As per valuation metrics, EV/Sales & Price/Earnings multiples of the Castor Maritime Inc are currently higher as compared to the corresponding multiples of the Freight & Logistics Services industry, reflecting overstretched valuations.
• From the technical standpoint, 14-day RSI is supporting downward movement (around 65 level), which means the stock price could decline in the short term.

Key Risks

• Any change in regulations and government policies could affect the overall business of the Company.
• The covid-19 outbreak has resulted in supply chain disruptions which will have a negative impact on the Company’s performance.

Recent News

On 8 January 2021, Castor Maritime announced that it had signed a securities purchase agreement with unaffiliated institutional investors to issue around 137.0 million of shares and warrants at $0.19 of the purchase price.

Financial Highlights – Q3 & 9M FY2020 (30 September 2020) (released on 11 November 2020)

(Source: Quarterly Report, Company Website) 

• In the third quarter and nine months period of the financial year 2020, the Company reported a significant increase in revenue.
• The profitability margins declined significantly for the period, due to higher operating expenses incurred.
• The Company’s cash balance (including restricted cash balance) increased significantly by 654% to $38.1 million as on 30 September 2020 (31 December 2019: $5.1 million).

One Year Share Price Chart

(Source: Refinitiv, chart created by Kalkine Group)

Conclusion

The Company has shown a decline in financial performance in the third quarter and nine months period of the financial year 2020. Despite the higher revenue, the bottom-line performance declined, while profitability margins remained in the negative zone. Castor Maritime needs to manage its operating expenses unless it results in further deterioration in financial performance in the coming years. The Company’s operations were significantly impacted by the impact of the covid-19 pandemic, as it caused significant turbulence in the dry bulk sector. CTRM expects shipping market to remain uncertain in the near future. The stock made a 52-week low and high of USD 0.1123 and USD 2.60, respectively.

Based on the above rationale, we have given an “Avoid” recommendation on Castor Maritime Inc at the closing price of USD 0.3356 (as on 15 January 2021), with support from few catalysts needs to be evaluated at a later stage such as the improved charter rates.

Seanergy Maritime Holdings Corp

Seanergy Maritime Holdings Corp (NASDAQ: SHIP) is a US-listed Capesize shipping Company. The Company offers dry bulk transportation services through the modern fleet.

Investment Highlights - Seanergy Maritime Holdings Corp – Avoid at USD 0.8099

• Due to the impact of the covid-19 pandemic, the Company witnessed a decline in revenue and loss surged for nine months period for FY2020.
• In the last one year, the Company delivered a negative return of ~89.88% and delivered lower returns compared to the benchmark Index.
• As per valuation metrics, EV/Sales, Price/Cash Flow & Price/Earnings multiples of the Seanergy Maritime Holdings Corp are currently higher as compared to the corresponding multiples of the Freight & Logistics Services industry, reflecting overstretched valuations.
• From the technical standpoint, 14-day RSI is in the oversold zone and is supporting downward movement (around 74 level), which means the stock price could decline in the short term.

Key Risks

• The Company is exposed to several operational risks associated with geological and weather conditions.
• The ongoing challenges of Covid-19 pandemic may increase its operating cost and hamper business activities.

Financial Highlights – Q3 & 9M FY2020 (30 September 2020) (released on 20 November 2020)

(Source: Quarterly Report, Company Website) 

• In the third quarter and nine months period of the financial year 2020, due to lower average Capesize spot earnings, the revenue declined.
• The net income increased in Q3 FY2020, reflecting better control over expenses. For nine months period, the net loss increased.
• The cash balance as on 30 September 2020 increased to $33.8 million (31 December 2019: $14.6 million).

One Year Share Price Chart

(Source: Refinitiv, chart created by Kalkine Group)

Valuation Methodology: Price/Cash Flow Approach (NTM) (Illustrative)

Conclusion

The Company reported a decline in financial performance in the first nine months of the financial year 2020. Both the top-line and the bottom-line performance declined, while profitability remained in the negative zone. SHIP managed to increase its liquidity position and effectively managed operating expenses in the third quarter of the financial year 2020. The covid-19 pandemic has significantly impacted the shipping industry and has resulted in port restrictions globally. The Company expects the market to remain volatile for short-term and will show a positive trend in the long run. The stock made a 52-week low and high of USD 0.39 and USD 8.32, respectively.

Based on the above rationale, we have given an “Avoid” recommendation on Seanergy Maritime Holdings Corp at the closing price of USD 0.8099 (as on 15 January 2021), with support from few catalysts needs to be evaluated at a later stage such as improvement in rates.

*All forecasted figures and Peer information have been taken from Refinitiv, Thomson Reuters.

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