Alligator Energy Limited (ASX: AGE)

Incorporated in 2009, it deals into development and exploration of energy metal resources, mainly focussing on uranium in South Australia and Northwest Italy. It also farm-in and directly hold lease exploration permits covering nickel (Ni), cobalt (Co), copper (Cu). Its market capitalization as of 3^rd December 2021 stood at AUD 163.73 million.

Financial & Operational Updates – On 19^th November 2021, AGE commenced the drilling (14 holes) at Samphire Uranium Project. As per its quarterly report on 29^th October 2021, it completed its acquisition of EL adjacent to Plumbush Deposit at Samphire Project. It completed its share placement of AUD 10.07 million through sophisticated, institutional and professional investors.

Its sales receipts for 1QFY22 were reported as nil and closed the quarter with a cash balance of ~AUD 11.1 million at the end of 30^th September 2021 versus ~AUD 1.63 million at the end of 30^th June 2021. On 22^nd October 2021, it announced bonus options (10:1 ratio) to be issued at nil consideration and exercisable at AUD 0.045. The Bonus Option will be expired on 1^st February 2022. On the same date, it appointed Dr Andrea Marsland Smith as a Chief Operating Officer (COO) for its Samphire Drilling Project. As per Annual Report FY21, it reported other income for the FY21 as ~AUD 3.14k versus ~AUD 5.78k in the FY20. Its total loss for FY20 was ~AUD 985k versus ~AUD 991k in FY21.

Technical Analysis: AGE prices broke crucial support level of 0.059 and completes ABC corrective pattern on the weekly chart. Prices are now taking support of the downward sloping trend line. Prices also taking support of 21-period SMA, and also trading above its 50-period SMA, indicating a positive stance. The RSI (14-period) has reached around mid-point from an overbought zone and trading at ~50.001 levels. The important support and resistance levels are AUD 0.048 and AUD 0.063, respectively.

 After considering its updates on Samphire Project, share placement and bonus share issuance, the investors with a high-risk appetite can consider it as a ‘Speculative Buy’ along with incorporating the support and resistance as one of the tools while analysing the investment opportunity. The stock was analysed as per the current market price of AUD 0.054 per share, as of 3^rd December 2021, 12:50 PM (GMT+10), Sydney, Eastern Australia. However, the risk levels are extremely high in view of the future findings and its saleability.

Weekly Technical Chart – AGE

Source: REFINITIV

European Lithium Limited (ASX: EUR)

The company was incorporated in 2010 and it is involved in lithium exploration and development. It owns and operate flagship Wolfsberg Lithium Project. Its market capitalization as of 3^rd December 2021 stood at AUD 129.65 million.

Financial & Operational Updates –After the collaboration agreement with Jadar in November, on 1^st December 2021, it revealed that Jadar signed an MOU with Yahua International Investment and Development Co. Ltd, to acquire and develop lithium projects together and deliver spodumene concentrates globally.

On 2^nd December 2021, high grade quality battery grade lithium was found and reported an 11% increase in total measured resource estimation at its Wolfsberg Lithium Project. On 23^rd November 2021, EUR got listed on OTCQB market in the US. On 3^rd November 2021, it agreed to acquire Petro Consulting to extract Lithium in Ukraine.

As per the Quarterly Report released on 29^th October 2021, its sales receipts for 1QFY22 were reported as nil and closed the quarter with a cash balance of ~AUD 8.63 million at the end of 30^th September 2021 versus ~AUD 5.42 million at the end of 30^th June 2021. As per the Annual Report released on 16^th September 2021, EUR posted a total loss of ~AUD 3.96 million in FY21, as compared to the total loss of ~AUD 3.26 million in FY20.

Technical Analysis: After seeing a robust rally from lows of AUD 0.054 on the weekly chart, EUR’s prices have started correcting from its 52-week high at AUD 0.19 tested in first week of November. Though moving above the 50-period and 21-period SMA, its prices broke the upward sloping trendline by downside. The momentum oscillator RSI (14-period) is trading at (~54.410), has reversed from the overbought levels and currently is in a mid-range. The crucial support level for the stock is placed at AUD 0.094, while the key resistance is at AUD 0.13.

After considering the company’s net losses and RSI levels, investing in this stock at such uncertain levels should be taken with calculated approach, hence a ‘Watch’ stance is suggested. The stock was analyzed as per the closing price of $0.115 per share, down by ~4.167% as of 3^rd December 2021.

Weekly Technical Chart – EUR

Source: REFINITIV

Ora Banda Mining Limited (ASX: OBM)

OBM was found in 2002 and is involved in mineral development and exploration, mainly dealing in the Davyhurst Gold Project. It holds market capitalization at AUD 68.19 million as of 3^rd December 2021.

Financial and Operational Updates: As per the Quarterly Report released on 29^th October 2021, it updated the following:

• OBM completed its production of 14,279 oz gold for the 1QFY22 with a sale of 13,522 oz with an average price of ~AUD 2,443 per oz.
• It forecasted its gold production of ~70k to ~75k oz for FY22, owing to the improvement in the December 2021 Quarter.

Its sales receipts for 1QFY22 were reported as AUD 33.04 million and closed the quarter with a cash balance of ~AUD 24.53 million (no debt) at the end of 30^th September 2021 versus ~AUD 24.22 million at the end of 30^th June 2021. As per its Annual Report for FY21, it reported an increase of revenue from ordinary activities reaching at ~AUD 25.16 million in FY21 versus nil in FY20. On the other hand, its net losses widened from ~AUD 6.68 million in FY20 to ~AUD 22.28 million in FY21.

Technical Analysis: On the weekly chart, OBM’s price are making new lows every week and currently trading below the trend-following indicators 21-period SMA and 50-period SMA, which may act as a resistance level for the stock. The momentum oscillator RSI (14-period) is trading in an oversold territory at ~24.078 level, indicating weak price momentum for the stock. The crucial support level for the stock is placed at AUD 0.060, while the key resistance is at AUD 0.079.

A ‘Watch’ stance is suggested, after considering its current price, widening losses, and RSI level. The stock was analyzed as per the closing market price of AUD 0.070 per share, as of 3^rd December 2021.

Weekly Technical Chart – OBM

Source: REFINITIV

NOTE: Ora Banda Mining 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 recommendation 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.

Australian Pharmaceutical Industries Limited (ASX: API)

API was established in 1910 and being a pharmaceutical distributor, it deals in distribution of health and beauty products mainly in Australia and New Zealand. It holds a market capitalization of AUD 854.75 million as of 3^rd December 2021.

Financial & Operational Updates – After the disapproval of merger agreement from Sigma Healthcare Limited, on 2^nd December 2021 Woolworths Group announced that it has submitted a non-binding contract to acquire API for a cash offer price of AUD 1.75 per API share (total equity value of AUD 872 million) by way of a scheme of arrangement. In the month of November 2021, MUFG and The First Sentier Investors Holdings Pty Limited changed their substantial shareholding reaching to ~6.66% individually.

On 8^th November 2021, Wesfarms has entered into a Scheme Implementation Deed SID to acquire API for cash offer price of AUD 1.55 per API share by way of a scheme of arrangement. Before the announcement, Wesfarms own 19.3% of API’s shares.

As per the Annual Report, its revenue from ordinary activities decreased by ~0.4% Y-o-Y and was reported as ~AUD 4,004.86 million in FY21 versus ~AUD 4,019.53 million in FY20. It converted its net losses of ~AUD 7.11 million in FY20 to net profits of ~AUD 1.15 million for FY21. Cash at the end of FY21 was reported as ~AUD 38.79 million as of 30^th June 2021 versus ~AUD 60.71 million in PcP.

Technical Analysis: API’s prices have been moving into a rising channel pattern since past one year and currently trading at 52-week high at AUD 1.765. The momentum oscillator RSI (14-period) is trading in an overbought zone at (~78.963) indicating an expected short-term bearish movement.  

Valuation Methodology: P/E Multiple Based Relative Valuation (Illustrative)

Source: Analysis by Kalkine Group

*% Premium/(Discount) is based on our assessment of the company’s NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

Stock Recommendation: Over the six months, the stock has provided a positive return of ~50.86% and is trading above the average 52-week price level band of AUD 1.060 and AUD 1.765. The stock has been valued using P/E multiple based illustrative relative valuation method and arrived at a target price with a downside of low double-digit (in % terms). For the purpose of valuation, peers like Sigma Healthcare Ltd (ASX: SIG), Sonic Healthcare Ltd (ASX: SHL), Virtus Health Ltd (ASX: VRT), and others have been considered. The company can trade at a slight discount to its peers, considering its risks associated with upcoming execution of acquisition and the changing preferences of customers and financial performance. Considering the company’s decline in FY21 revenue, current price trading at higher levels, valuation, and key risks associated with the business, we suggest an “Expensive” rating on the stock at the current market price of AUD 1.760, as on 3^rd December 2021, at 02:20 PM (GMT+10), Sydney, Eastern Australia.

Weekly Technical Chart – API

Source: REFINITIV

Note 1: The reference data in this report has been partly sourced from REFINITIV.

Note 2: Investment decisions should be made depending on the investors’ appetite for upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and subject to the factors discussed above.

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and the uptrend may take a pause due to profit booking or selling interest. 

The Green colour line reflects the 21-period moving average. SMA helps to identify existing price trend. If the prices are trading above the 21-period, then it shows prices are currently trading in a bullish trend, (Vice – Versa).

The Blue colour line reflects the 50-period moving average. SMA helps to identify existing price trend. If the prices are trading above the 50-period, then it shows prices are currently trading in a bullish trend, (Vice – Versa).

The Yellow colour line represents the Trendline.

The Purple colour line in the chart’s lower segment reflects the Relative Strength Index (14-Period) which indicates price momentum and signals momentum in trend. A reading of 70 or above suggests overbought status while a reading of 30 or below suggests an oversold status.

Disclaimer - This report has been issued by Kalkine Pty Limited (ABN 34 154 808 312) (Australian financial services licence number 425376) (“Kalkine”) and prepared by Kalkine and its related bodies corporate authorised to provide general financial product advice. Kalkine.com.au and associated pages are published by Kalkine.

Any advice provided in this report is general advice only and does not take into account your objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your objectives, financial situation and needs before acting upon it.

There may be a Product Disclosure Statement, Information Statement or other offer document for the securities or other financial products referred to in Kalkine reports. You should obtain a copy of the relevant Product Disclosure Statement, Information Statement or offer document and consider the statement or document before making any decision about whether to acquire the security or product.

You should also seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice in this report or on the Kalkine website. Not all investments are appropriate for all people.

The information in this report and on the Kalkine website has been prepared from a wide variety of sources, which Kalkine, to the best of its knowledge and belief, considers accurate. Kalkine has made every effort to ensure the reliability of information contained in its reports, newsletters and websites. All information represents our views at the date of publication and may change without notice.

Kalkine does not guarantee the performance of, or returns on, any investment. To the extent permitted by law, Kalkine excludes all liability for any loss or damage arising from the use of this report, the Kalkine website and any information published on the Kalkine website (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine hereby limits its liability, to the extent permitted by law, to the resupply of services.

Please also read our Terms & Conditions and Financial Services Guide for further information.

On the date of publishing this report (referred to on the Kalkine website), employees and/or associates of Kalkine and its related entities do not hold interests in any of the securities or other financial products covered on the Kalkine website.

Kalkine Media Pty Ltd, an affiliate of Kalkine Pty Ltd, may have received, or be entitled to receive, financial consideration in connection with providing information about certain entity(s) covered on its website.