Piedmont Lithium Limited

PLL Details

Improvement in Bottom-Line: Piedmont Lithium Limited (ASX: PLL) is engaged in the exploration and development of resource projects. The market capitalisation of the company stood at ~$554.55 million as on 7^th October 2020. The company’s recent spodumene concentrate supply agreement with Tesla may create headroom for growth in future. In addition, the company is expecting to deliver the first shipment for supply agreement in 2022-23. Also, the rising demand for the electric vehicle may prove as a major contributor to business growth. For the year ended 30^th June 2020, the company recorded a net loss after tax of US$5.7 million as compared to US$9.8 million in FY19. This was mainly due to a decline in exploration and evaluation expense of US$3.5 million to US$3.6 million.

Financial Summary (Source: Company Reports)

Outlook: For the upcoming 12 months, the company is focused on achieving numerous milestones, which mainly include drilling to expand mineral resources, the rollout of definitive feasibility study and arrangement of funds for its projects.

Stock Recommendation: As on 30^th June 2020, cash balance of the company stood at US$18.86 million. The stock of PLL has moved up by 445.45% and 471.43% in the past one and three months, respectively. The 52-week low and high of the stock stands $0.062 and $.0.605, respectively. On the technical analysis front, the stock price of PLL has a support level of ~$0.449 and a resistance level of ~$0.605. Hence, considering the past movement in the stock, current trading levels, loss making business, we advise investors to avoid the stock at the current market price of $0.600 per share, up by 25% on 7^th October 2020. However, we will keep a close eye on the company’s future financial and operational performance on the face of recent deal with Tesla and a release of the latest financial results.

PLL Daily Technical Chart (Source: Refinitiv, Thomson Reuters) 

Vital Metals Limited

VML Details

Completion of Placement: Vital Metals Limited (ASX: VML) is involved in mineral exploration in Niger and in Burkina Faso, West Africa. The market capitalisation of the company stood at $76.65 Mn as on 7^th October 2020. Recently, the company has raised A$8.0 million (before costs) through placement of around 400 million new shares at an issue price of A$0.02 per new share to institutional, sophisticated and professional investors. The company would use the funds to progress the business towards commencing processing operations in Q2 CY21, which primarily include the purchase of the ore sorter, sampling and met test work, extraction plant EPCM and for general working capital. In addition, a binding term sheet has been signed by the company with Saskatchewan Research Council in order to discuss definitive agreements for the construction of a rare earth extraction plant in September 2020. For the year ended 30^th June 2020, the company reported an operating loss amounting to $4,578,593 as compared to the profit of $3,225,692 in FY19.

Key Financials (Source: Company Reports)

Outlook: Going Forward, the company is planning to continue its exploration and development activities on its existing projects. In addition, the company believes that it is in a strong and stable financial position to continue and grow its existing activities.

Stock Recommendation: As on 30^th June 2020, the cash balance of the company stood at $1.8 million. The company’s strategy revolves around driving low-cost near-term cashflow for financing the development of large-scale operations. The stock of VML has moved up by 172.37% and 328.57% in the past three and six months, respectively. As a result, the stock is inclined towards its 52-week high level of $0.033. In addition, the stock is trading at a price to book value multiple of 4.6x as compared to the industry median (Basic Materials) of 2.4x on TTM basis. On the technical analysis front, the stock price of VML has a support level of ~$0.028 and a resistance level of ~$0.033.  Therefore, considering the current trading level and past movement in the stock, we give an “Expensive” rating on the stock at the current market price of $0.031 per share, up by 3.333% on 7^th October 2020.

VML Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

American Rare Earths Limited

ARR Details

Benefits from US Presidential Orders: American Rare Earths Limited (ASX: ARR) is engaged in the development and exploration of strategic technology metals in the USA and Australia. The market capitalisation of the company stood at $25.89 Mn as on 7^th October 2020. Recently, the company noted a new US Presidential Executive Order, which stated the significance of cooperation on supply chain issues with international partners and allies. These orders underline the strategic value of the company’s two American projects to the US government. In addition, the company’s US-based board and management is in a decent position to take benefit of the strategic initiatives being offered by the US government. For FY20, the company reported revenue amounting to $55,977 as compared to $35,140 in FY19. ARR recorded a profit of $923,288 in FY20 against loss of $1.3 million in FY19, which was supported by the gain of $3.2 million from the disposal of interest in joint venture tenements.

Key Financials (Source: Company Reports)

Growth Aspects: The company believes that the recent presidential orders may support the attraction and potential value of its projects as the company possesses strategic rare earth assets in Arizona and Wyoming. The company has scheduled to conduct its 2020 Annual General Meeting on 11^th November 2020.

Stock Recommendation: At the end FY20, the net cash used in the operating activities stood at $964,900 and cash balance stood at $1.4 million. The stock of ARR has moved up by 178.13% and 368.41% in the past one and three months, respectively. In addition, the stock is trading at a price to book value multiple of 9.0x as compared to the industry median (Basic Materials) of 2.4x on TTM basis. On the technical analysis front, the stock price of ARR has a support level of ~$0.091 and a resistance level of ~$0.156.  Therefore, considering the recent growth in financials and US Presidential Executive Order and current trading levels, we are of the view that most of the positive factors have been discounted in the current market price and give an “Expensive” rating on the stock at the current market price of $0.150 per share, up by 68.539% on 7^th October 2020, owing to release of US Presidential Executive Order.

ARR Daily Technical Chart (Source: Refinitiv, Thomson Reuters) 

MyFiziq Limited

MYQ Details

Signing of Binding Term Sheet: MyFiziq Limited (ASX: MYQ) is engaged in the development and marketing of mobile application for use in the fitness industry. The market capitalisation of the company stood at $151.76 Mn as on 7^th October 2020. Recently, the company announced that it has reached a binding term sheet with Nexus Vita Pte Ltd, which is likely to create a guaranteed minimum annual revenue of USD$3,588,000 p.a. Nexus-Vita and MYQ would work together to integrate the CompleteScan platform into all of Nexus-Vita’s verticals. Both the parties under the term sheet would provide a market-ready integration into the Nexus-Vita platform by January 2021. For the year ended 30^th June 2020, the company reported net loss after income tax $5,396,512 as compared to $4,357,162 in FY19.

Key Financials (Source: Company Reports)

Outlook: Looking forward, the company is focused on generating revenue on the back of previously signed fifteen term sheets with partners.

Stock Recommendation: During the year, the company secured funding of US$1.5 million for working capital and the dual listing to NASDAQ Capital Market. In the past one and three months, the stock has moved up by 183.87% and 380%, respectively. The stock is trading closer to its 52-week high level of $1.495. On the technical analysis front, the stock price of MYQ has a support level of ~$0.984 and a resistance level of ~$1.494. Thus, considering the movement in stock within past months and current trading levels, we give an “Expensive” rating on the stock at the current market price of $1.280 per share, down by 3.03% on 7^th October 2020.

MYQ Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

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