QBE Insurance Group Limited (ASX: QBE)

QBE is an Australian based insurance company dealing with underwriting general insurance and reinsurance risks for personal, business, corporate, institutional, and multinational customers. The company offers a wide range of services as commercial, personal, and speciality products, such as commercial and domestic property, motor and motor casualty as well as risk management solutions. It also manages Lloyd’s syndicates, as well as offers investment management services. The company operates in Australia, Europe, North America, Asia, and the Pacific. The company was incorporated in 1886 and is based in Sydney, Australia. The market capitalization stood at $18.26 billion at $12.210 per share.

Financial & Operational Update – on 12^th August 2021, the company released its half-yearly results ending on 30^th June 21, stating a drastic turnaround from the losses after tax of US$712 million reported in the prior period to the net profit after tax of US$441 million for the half-year period ending June 2021, lead by underwriting and investment returns. Further, the revenues from ordinary activities saw a climb of 14% to US$9.13 billion and the combined commission and expense ratio decreased to 29.0% in the current period from 31.30% in the prior period. On the income from the investments, the company turned around the tables, from the loss of US$90 million in the prior period to the net income of US$58 million in the current year half-yearly ending June 2021. The company also cheered its shareholders by declaring dividends of 11 cents per share, which is more than two times the dividends of 4 cents paid in the previous comparison period. The debts levels were reduced with debt-to-equity ratio dropping to 31.1% as compared to 34.8% in the previous reported period.

Technical Analysis- The stock depicted wide swings formed higher highs and higher lows and printed the recent highs of $12.72 and revolving around the nearby levels. The relative strength index is at 64.517, which is heading towards the overbought territory, implying some correction evident in the near term from these levels. The 21 days simple moving average is hovering close to the stock price and placed below at $11.531, giving some more upside to the stock, also the reliability factor of Moving Averages are not that high as they are considered as lagging indicators and mostly opted for long term time zones. As the stock price is crawling upside, to refrain it from falling into the bear territory, the support is placed at $11.50 levels. For the prices to regain the uptrend, a resistance of $13.30 needs to be taken off with strong volumes.  

Improving revenues, declining commission and expenses ratio, increasing dividends payout ratio gives all rationale for investment, but the elevated rice levels do not provide the safety margin for the investors at current levels. Hence, we give the stock the rating of ‘Avoid’ at the closing price of $12.210, down by ~1.374%, as of 20^th August 2021.

Daily Technical Chart – QBE

Source: REFINITIV

Tietto Minerals Limited (ASX: TIE)

TIE is engaged in the gold exploration activities in Côte d’Ivoire and Liberia in West Africa. It holds interests in the Abujar gold located in the central-western region of Côte d’Ivoire; and the Dude South and Cestos projects in Liberia. The company was incorporated in 2010 and is headquartered in West Perth, Australia. The market capitalization stood at $145.97 million at $0.305 per share.

Financial & Operational Updates – On 29^th July 2021, the company released its activities report for the quarter ending 30^th June 2021, stating the updates on its production and exploration activities. For its Abujar Project, Tietto’s aggressive drilling campaign discovers the gold resources to 87.5MT @ 1.2g/t Au for 3.35 Moz, containing gold mineralization beneath the surface. On its Abujar Gold Mine, the Definitive Feasibility Study will provide update on the funding estimates of the large scale 4Mtpa open-pit mining operation. On the financial front, the company did not record cash receipts from its customers for the straight 12 months ending on 30^th June 2021. The increasing operational activities and expenses, further lead to the drain on its cash reserves, which declined to $45.19 million for the quarter ending 30^th June 2021, from $51.80 million in the previous quarter ended on 31^st March 2021.

Technical Analysis- The stock is in a downtrend forming lower lows and lower highs and with few spikes, leading to the sell-off gradually at every instance. The relative strength index shows 33.166, which is directing towards the lower end and eventually oversold territory. The 21 days simple moving average is placed at $0.346, which is above the stock price, indicating a clear downwards trend continuation from the current levels. Since the prices are in a downward trajectory, hence the support level of $0.245 is very crucial, from where the buyer can emerge. The resistance of the stock is found at $0.385.

Due to the lack of operating revenues, exploration risks, volatile gold prices, and declining cash balances along with stock prices, we give the stock the rating of ‘Avoid’ at the closing price of $0.305, down by ~4.69%, as of 20^th August 2021.

Daily Technical Chart – TIE

Source: REFINITIV

Australian Potash Limited - (ASX: APC)

APC is an Australian based exploration company, focusing on potash, gold, and nickel sulphide minerals. It holds a 100% interest in the Lake Wells Sulphate of potash property located in the northeast of Kalgoorlie, Western Australia. The company was incorporated in 2011 and is based in Subiaco, Australia, with a current market capitalization is $63.12 million, and current price of $0.10 per share.

Financial & Operational Highlights –  As per the exchange announcements shared on 3^rd August 21, the company shared encouraging results from the drilling program carried out at its Lake Wells Gold project stating the grade of gold mineralisation is encouraging and hence the further drilling is carried out. On 30^th July 2021, the company released its activities report for the quarter ending 30^th June 2021, stating the Front End Engineering Design (FEED) program for Lake Wells Sulphate of Potash Project (LSOP) results were announced which were positive. Also, the Export Finance Austalia (EFA) granted a conditional 10-year loan facility of $45 million for such projects. On 10^th May 21, the company raised $10 million through global institutional, professional and sophisticated investors and the proceeds were to be utilised for carrying out the work at Lake Well Sulphate of Potash project. On the financial front, the company did not record cash receipts from its custoemrs for the current quarter period. Its cash balances were increased to $7.80 million for the quarter ending 30^th June 2021, from $3.45 million in the previous quarter ended on 31^st March 2021.

Technical Analysis- The stock showed a gradual uptrend and spiked in April 2021, printing the highs of $0.25 and sold off immediately and entering into the downward trajectory to date. The relative strength index is at 27.551, which is drifting towards the oversold of the range, indicating that the carnage is not yet done with the stock prices, and bears are still in control. The 21 days simple moving average is placed above the stock price at $0.119, indicating a further downward movement from the current level.  The support is placed at $0.080, from where we can witness bargain hunting, whereas the resistance is placed at $0.1350 levels. Breaking either side of the range will give a clear picture of the trend formation. 

Due to a nil revenue generation from its mines, exploration risks, volatile commodity prices, and declining stock prices, we give the stock the rating of ‘Avoid’ at the closing price of $0.100, up by ~1.01%, as of 20^th August 2021.

Daily Technical Chart – APC

Source: REFINITIV

Legend Mining Limited (ASX: LEG)

LEG is engaged in the exploration and evaluation of mineral properties in Australia. The company primarily explores nickel, copper, cobalt, zinc, silver, and gold deposits. It holds interests in the Rockford project located in the Fraser Range district of Western Australia. The company was incorporated in 1993 and is based in West Perth, Australia. The market capitalization stood at $220.41 million at $0.076 per share.

Financial & Operational Highlights – On 19^th July 2021, the company released its activities report for the quarter ending 30^th June 2021, stating the updates on its exploration activities spread across various projects. For its Rockford Project, Fraser Rane, the massive Nickel- Copper sulphide mineralisation was acknowledged in that area. The results from New Assays and drilling across its Mawson project further revealed the presence of Nickel-Copper sulphide at RKDD053 intersects 31.2 sulphide zone. The company received operating income for the quarter ending June 2021, of $5k, which were absent during the previous quarter ending on 31^st March 2021. The limited cash receipts and expanding operations at various drilling sites, lead to the drain on its cash reserves, which declined to $24.83 million for the quarter ending 30^th June 2021, from $29.14 million in the previous quarter ended on 31^st March 2021.

Technical Analysis- The stock showed a gradual uptrend with a sudden spike printing the lifetime high of $0.215, and eventually sold off, entering into the downward trend forming lower highs and lower lows. The relative strength index is at 30, which is heading towards the lower end of the zone, indicating some more downtrend left with the stock to push the prices lower. The 21 days simple moving average is hovering above the stock price at $0.086, which implies the further downside movement of the stock from current levels. For the prices to find stable grounds, the support of $0.065 should be well respected and held firmly. Since the stock prices exhibit are declining and might see a dead cat bounce, hence the resistance can be plotted at lower levels of $0.090.

Due to the insignificant operating revenues, declining cash balance and declining stock prices, we give the stock the rating of ‘Avoid’ at the closing price of $0.076, down by ~5.0%, as of 20^th August 2021.

Daily Technical Chart – LEG

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 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.

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