Stocks’ Details

Wide Open Agriculture Limited

5^thConsecutive Quarter of Growth, Sept’20 Results: Wide Open Agriculture Limited (ASX: WOA) is agriculture and regenerative food company. Besides ASX, WOA is also listed on Frankfurt Stock Exchange. The company witnessed 5^th consecutively quarter over quarter growth in revenues for the period ended 30 September 2020.  Revenue increased by 34% (q-o-q) to $764,807 in 1QFY21. Revenues also increased by 282% on a year over year basis. The company generated $721k cash receipts from customers in 1QFY21. Net cash outflows from operating activities stood at $831k during the quarter. The company exited the quarter with a cash balance of $6.563 million.

QoQ Revenue Growth, Q1FY20-Q1FY21 (Source: Company Reports)

Raising of Capital via Placement & SPP: WOA raised $7 million via placement to European and Australian investors and another $1.5 million via share purchase plan (SPP) to present shareholders to introduce new products and build a commercial oat milk, pilot-scale lupin manufacturing facility.

Key Initiatives: During FY20, WOA built Dirty Clean Food (DCF) – a distribution platform for direct-to-consumer online sales to reach global customers. Currently, it has more than 55 premium cafes, restaurants, and meal kit companies on board. WOA also introduced a plant-based milk OatUP and has started its initial sales. Based on the MOU with CBH Group for marketing and distribution of carbon neutral grain, WOA signed a project to develop carbon neutral certified products for buyers expecting more sustainable grain alternatives.

Outlook: Based on the launch of new products such as vegetable boxes and chicken, and increased customer interest in healthy food items, it foresees DCF sales momentum to continue for the last quarter of CY20 as well. WOA is progressing well on lupin protein trials and aiming to complete the same by year-end. For the carbon neutral grain project, the Board is targeting the year 2023 for carbon neutral operations, and to be climate positive, henceforth.

Stock Recommendation: As on 16^th November 2020, the market capitalisation of the company stood at ~$96.91 million. The stock gave a negative return of 26.31% in the last three months and a positive return of 221.31% in the last six months. The stock is currently trading very close to its 52-week average level and holds potential for growth. On the technical analysis front, WOA has an immediate support level of ~$0.872 and an immediate resistance level at ~$1.153. Considering, the current trading levels, 5^th consecutively quarter over quarter growth in revenues, growing customer interest in regenerative food, and decent outlook, we give a “Speculative Buy” recommendation on the stock at the current market price of $0.980, up by 3.157% on 16^th November 2020.

NTM Gold Limited

A Look at NTM Gold’s Sept'20 Results: NTM Gold Limited (ASX: NTM) is involved in the discovery of mining tenements, investment of liquid assets in banks, and administration of the group. Presently, the company is running a 100% owned Redcliffe Gold Project with diamond drilling at Hub and completing an aircore program. As on 16^th November 2020, the market capitalization of the company stood at ~$60.17 million. The company’s cash balance as on 30 September 2020 stood at $5.21 million and net cash outflows from operating activities stood at $276k, during the quarter.

Cash Flow Details (Source: Company Reports)

Acquisition of Wells Group: During FY20, NTM completed a 100% purchase of Wells Group (a group of 4 tenements) for a cash consideration of $125,000. It views these tenements as highly prospective for the mineralisation of gold.

Announcement of Merger with Dacian Gold Limited: As on 16^th November 2020, NTM Gold Limited announced agreement for a merger with Dacian Gold Limited (DCN) by entering into a binding Scheme Implementation Deed (SID). Under a NTM scheme of arrangement, Dacian Gold Limited will buy 100% of the ordinary shares in NTM. The merged firm will exist and operate as DCN. The merger will lead to strategic consolidation of regional mineral resources and integration of the Redcliffe Gold Project into the Mt Morgans Gold Operations.

Outlook: The drilling program at Hub resulted in further exploration due to high-grade mineralisation potential found. NTM will drill the holes deeper at Gully and Bindy areas and release the subsequent results. For the Wells Group tenements, geological interpretation and targeting are being undertaken and ongoing by geophysical consultants. A few high priority targets have already been identified as well.

Stock Details: The stock gave a positive return of 8.69% in the last one month and a positive return of 48.80% in the last six months. The stock is trading above the average of its 52-weeks’ high and low level of $0.046 and $0.14, respectively. Post the transaction, DCN will hold 68.4% and NTM will hold 31.6% of the combined entity. Every NTM shareholder will receive 1 Dacian Gold share for every 2.7 NTM Gold shares held. NTM Gold options will be exchanged for new Dacian Gold options at the similar exchange (2.7) ratio. It is worth noting that the Boards of Directors of both DCN and NTM have unanimously recommended the shareholders to vote in favour of the Scheme, in the absence of a superior proposal and subject to an Independent Expert concluding that the Scheme is in the best interests of NTM shareholders. Hence, we advise investors to wait and observe the upcoming developments, post the announcement of the merger. The stock is trading at current market price of $0.125, up by 42.045% on 16^th November 2020.

Peninsula Energy Limited

Registered Decline in Sales of Uranium Concentrate and Net Loss for FY20: Peninsula Energy Limited (ASX: PEN) is engaged in the mining and development of uranium, with a market capitalisation of ~$61.52 million as on 16^th November 2020.

Q1FY21 Results Highlights: The company has started the field demonstration of MU1A Low pH under the Lance Project. It is advancing as per the plan and release initial results in the next quarter. Currently, the firm has a portfolio of uranium concentrate sale agreements amounting to 5.5 million as at 30 September 2020. The cash and cash equivalents balance stood at $12.643 million as on 30^th September 2020 and the net cash outflows from operating activities amounted to $2.516 million during the quarter.

Cash Flow Details, Q1FY21 (Source: Company Reports)

Outlook: The company has 450,000 lbs of uranium sales commitment to its customers with earnings forecast of net cash margin of US$6-$8 million in CY2021. For Q2FY21, it has a projected inflow of a net cash margin of US$1.4 million through one of the deliveries scheduled. The company has delivery commitments as per contracts running through to 2030 with future sales price at the upper end of US$51-$53 per pound range.

Stock Recommendation: The stock of PEN gave a positive return of 10.93% in the last one month and a negative return of 36.39% in the last six months. The stock is trading close to its 52-week low level of $0.056 and has a potential for future growth. On the technical analysis front, PEN has a support level of ~$0.06 and an immediate resistance level at ~$0.088. Considering, the stock’s current trading level, decent fundamentals, FY21 project pipeline, decent outlook, along with key risks, we give a “Speculative Buy” recommendation on the stock at the current market price of $0.071, up by 2.898% on 16^th November 2020.

Fatfish Group Limited

Quarterly Update of Activities and Financials ending Sept’20: Fatfish Group Limited (ASX: FFG) invests in technology ventures in the areas of e-commerce, video games & esports, fintech, interactive media. It has operations in Australia, Singapore, Indonesia, Malaysia, and Sweden. In mid-year of 2020, the company announced an on-market buy back of a maximum of 60 million its ordinary fully paid shares for up-to a 1-year period. On 15^th September 2020, I Candy Interactive Limited (ICI), an investee company of FFG, raised a total of $2.45 million capital. On 6^th Oct’20, it launched a new game globally post running early access trials and received more than 1 million pre-orders. FFG holds 192.5 million shares in ICI through Abelco. After Sept’20, FFG raised $1.5 million through placement of shares to sophisticated investors, receiving more than $7 million in bids in response. During Q1FY21, FFG received $110k as receipts from customers and had $57k as cash inflows from operating activities. FFG had a cash balance of $194k as on 30 September 2020.

Cash Flow Details, Q1FY21 (Source: Company Reports)

Half Yearly Results (H120) & Activities: The revenue of the firm was down by 77% from $1,492,261 in 1H19 to $344,916 in 1H20. The net loss during the period fell by 16% from $4,899,700 in 1H19 to $4,130,002 in 1H20. During 1H20, FGG founded RightBridge Ventures AB to invest in innovative digital companies pertaining to gaming and esports.

What to Expect: Different ventures of FFG are in different stages of business and growth. ICI has launched its videogames business and beginning to generate revenue. For Esports, it is launching new competitions and currently generating revenue through e-tournaments and events.

Stock Recommendation: As on 16^th November 2020, the market capitalization of the company stood at ~$41.26 million. The stock gave a positive return of 226.66% in the last one month and a positive return of 600% in the last six months. The stock is trading close to its 52-week high level of $0.058. On TTM basis, the stock of FFG is trading at an EV/Sales multiple of 25.5, higher than the industry average (Investment Banking & Investment Services) of 13.6x, and thus seems overvalued. On the technical analysis front, FFG has a support level of ~$0.035 and an immediate resistance level at ~$0.052. Considering, the volatility in bottom and top line in the last 5 years, current trading level, and price movement in the past months, we advise investors to wait for better entry levels and give an “Expensive” rating on the stock at the current market price of $0.049, up by 8.88% on 16^th November 2020.

SIPA Resources Limited

A Look at the Company’s Projects till Date: SIPA Resources Limited (ASX: SRI) is engaged in the exploration and discovery of gold and base metals in Western Australia. The company currently operates Paterson North Copper-Gold Project, and Warralong Project in Wolfe Basin. It has recently finished an IP survey and commenced a drilling program on Warralong Project. In Jul’20, it pegged Skeleton Rocks Project for nickel-copper and gold platinum group deposits and will commence aeromagnetic survey in Q4FY21. Its’ exploration is on hold subject to finding a partner for funding assistance. In Aug’20, the company entered a $12 million partnership and farm-in with Rio Tinto Exploration for Paterson North Copper-Gold Project to sped fast exploration work, gain technical-expertise, and share expenditure on the project. In Sept’20, it entered another JV and binding agreement with Buru Energy Limited for Barbwire Terrace Base Metals Project. During Sept’20, the company raised a $2.3 million in share placement to sophisticated and professional investors, including strong support from existing SIPA major shareholders. 

Net Profit Registered for FY20 and Financial Highlights of Sept’20 Quarter: The company reported an increase in revenue from $353,471 million in FY19 to $456,018 million in FY20. The company raised $2.3 million capital from professional investors and existing SIPA major shareholders via an issue of 32.36 million shares. The cash balance position stood at $4.315 million as on 30 Sept’20 and net cash flows from operating activities at $228k during Sept’20. 

Cash Flow Details, Q1FY21 (Source: Company Reports)

Outlook: The firm aims to continue its present operations of land acquisition and mineral exploration with a view to commercialise project development.

Stock Recommendation: As on 16^th November 2020, the market capitalization of the company stood at ~$11.55 million. The stock of SRI gave a negative return of 15.58% in the last one month and a positive return of 12.06% in the last six months. On the technical analysis front, SRI has a support level of ~$0.057 and an immediate resistance level at ~$0.075. Considering, the lower average annual volume, lower market capitalization, market uncertainty due to the COVID-19 pandemic, and key risks, we suggest investors to wait for a better entry level and hence, give an “Avoid” rating on the stock at the current market price of $0.065 on 16^th November 2020.

Comparative Price Chart (Source: Refinitiv, Thomson Reuters)

Disclaimer  

The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkine.com.au and associated pages are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation. Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product. The link to our Terms & Conditions has been provided please go through them and also have a read of the Financial Services Guide. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine Pty Ltd do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as personalised advice.