Stocks’ Details 

B2Gold Corp.

FY2020 Result Highlights: B2Gold Corp. (NYSEAMERICAN: BTG) is a Canada-based gold production company with operating gold mines in Mali, Namibia, and the Philippines. As on 28 January 2021, the company’s market capitalization stood at ~$5.2 billion. For FY2020, the company has reported record annual total gold production of 1,040,737 ounces. Further, the company has reported consolidated gold revenues of $1.79 billion, a significant increase of 55% over FY19. In the fourth quarter alone, the company has reported total gold production of 270,469 ounces and gold revenues of $480 million, up 53% over the fourth quarter of 2019. During the year, the company successfully commissioned Fekola mill expansion to 7.5 million tonnes per annum (Mtpa).

Outlook: For FY21, the company expects its total gold production to be between 970,000 - 1,030,000 ounces (including attributable ounces projected from Calibre of between 50,000 - 60,000 ounces).  From 2020 to 2024, the company’s annual consolidated gold production is expected to average 950,000 ounces with AISC averaging $825 per ounce. The year 2021 is expected to be a year of aggressive exploration with a budget of approximately $66 million, including a record $25 million allocated to the Company's ongoing grassroots exploration programs.

FY21 Production Guidance (Source: Company Reports)

Valuation Methodology: EV/Sales Multiple Based Relative Valuation (Illustrative)

EV/Sales Multiple Based Relative Valuation (Source: Refinitiv, Thomson Reuters)

Note: All forecasted figures and peers have been taken from Thomson Reuters, NTM-Next Twelve Months

Stock Recommendation: Over the last three months, the stock has corrected by 19.99%. The stock has a 52-weeks low and high price of $2.16 and $7.55, respectively. On the technical analysis front, the stock has a support level of ~$3.98 and resistance of ~$6.23. We have valued the stock an EV/Sales multiple based illustrative relative valuation method and have arrived at a target price of low double digit-upside (in percentage terms). For the purpose, we have taken peers like Agnico Eagle Mines Ltd (NYSE: AEM), Barrick Gold Corp (NASDAQ: GOLD), Kinross Gold Corp (NYSE: KGC), etc. Considering the company’s decent operational and financial performance in 2020, FY21 outlook, Fekola mill expansion, and valuation, we give a “BUY” rating on the stock at the closing price of $4.96, up by 1.02% as on 28 January 2021.

Property Solutions Acquisition Corp.

Business Combination with Faraday Future: Property Solutions Acquisition Corp. (NASDAQ: PSAC) is a special purpose acquisition company, focused on forming a merger or a business combination with other businesses. Recently, the company entered into a definitive agreement with Faraday Future, a California-based global shared intelligent mobility ecosystem company, for a business combination. Under the agreement, the business combination will provide an estimated $1.0 billion of gross proceeds to Faraday Future and the combined company will be listed on the Nasdaq Stock Market under the ticker symbol “FFIE”. The transaction is expected to close in Q2FY21. 

Business Combination Rationale: PSAC considers Faraday Future as a highly attractive business, whose industry-leading technology and disruptive products could play a leading role in the future of advanced, connected, and electric mobility. The product portfolio of Faraday Future includes FF 91, FF 81, FF 71, and SLMD. The business combination transaction is expected to result in $748 million net proceeds to Faraday Future which will be used to fund the production of the FF 91. Faraday Future recently signed a framework cooperation agreement with Zhejiang Geely Holding Group, a leading automotive group in China. Zhejiang Geely Holding Group has also signed a subscription agreement to become a minority investor in Faraday Future in relation to the business combination with PSAC.

Outlook: The production launch of FF 91 is expected in 2021 and deliveries are expected to begin in Q1 2022E. In line with vehicle volume ramp, the company’s revenue is expected to grow to $21.44 billion by 2025. The company is targeting 30%+ contribution margin across FF Series and 20%+ contribution margin for Smart Last Mile Delivery.

Revenue Forecast (Source: Company Reports)

Key Risks: Faraday Future has a limited operating history and has not yet sold any production vehicles to customers. The company is also exposed to the risks related to the demand for vehicles in the automobile industry.

Stock Recommendation: Over the last three months, the stock has provided a return of 54.6%. The stock is trading very close to its recent 52-weeks high price of $17.5. On the technical analysis front, the stock has a support level of ~$11.42 and resistance of ~$16.02. Considering the anticipated benefits from the business combination with Faraday Future, expected production launch of FF 91 in 2021, expected revenue growth in the next five years, and associated key risks, we give a “Speculative Buy” recommendation to the stock at the closing price of $15.43, up by 18.69%, as on 28 January 2021, owing to the announcement regarding the proposed business combination with Faraday Future.

GTT Communications, Inc.

Secured Commitment for New Term Loan Facility: GTT Communications, Inc. (NYSE: GTT) is a leading global cloud networking provider that owns and operates a global Tier 1 internet network and provides a comprehensive suite of cloud networking services. As on 28 January 2021, market capitalization of the company stood at ~$276.45 million. On 22 December 2020, the company announced that it has secured commitment for New Term Loan Facility to strengthen liquidity position. Several of the company’s existing lenders and noteholders have committed to providing the company with a new $275 million delayed-draw term loan facility which will ensure that the company has appropriate resources to execute on its business plan.

Financial Results: Last financial results that the company had released was for the quarter ending 31 March 2020. For the quarter, the company had reported total revenue of $424.7 million and net loss of $83.3 million. As at 31 March 2020, the company had cash and cash equivalent of $106.4 million.

Q1FY20 Results (Source: Company Reports)

Outlook: Currently, the company is focused on closing the sale of its infrastructure division to I Squared Capital in 2021. From the divestment, the company is expected to receive an upfront cash payment of $2.02 billion at closing and total deferred payments of up to $130 million based on certain financial results.

Stok Recommendation: Over the last three months, the stock of GTT has provided a return of 32.76%. The stock is currently inclined towards its 52-weeks low price of $3.05. On the technical analysis front, the stock has a support level of $3.89 and resistance of $6.38. The company has recently announced that it will soon release its restated consolidated financial statements for the years ended December 31, 2019, 2018 and 2017, each of the quarters in the years ended December 31, 2019 and 2018, and the quarter ended March 31, 2020. Considering the aforesaid facts, divestment of infrastructure division, negative net margin an ROE, we suggest investors to avoid the stock at the closing price of $4.7, down by 16.81% as on 28 January 2021.

Comparative Price Chart (Source: Source: Refinitiv, Thomson Reuters)

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