Thorney Opportunities Limited

TOP Details

Latest Updates & April 2022 Performance: Thorney Opportunities Limited (ASX: TOP) invests in listed and unlisted securities of automotive, energy, media, and pharmaceutical companies to offer above average returns for shareholders from medium to long-term.

• In the latest update to the market on 23 May 2022, TOP notified buy-back of ~50,000 shares for ~$24,750 from the shareholders. The company intends to redeem a maximum of ~15.79 million shares per the ongoing redemption program.
• On 13 May 2022, Quickfee Limited (ASX: QFE) increased its shareholding from ~16.20% to ~18.96% in TOP.
• Investment Performance: TOP reported ~11.90% return for a 1-year investment horizon in its portfolio (as of 30 April 2022) versus ~2.91% return for the same investment period from the S&P Small Ordinaries Accum. Index.
• TOP witnessed robust momentum in the infrastructure and resource services sector for its exposure in SXE and MRM during the April month 2022 coupled with the weakened performance of portfolio firms such as ALG, AMA and DCG.

Growth Trend of Dividends; (Analysis by Kalkine Group)

Key Risks: The company faces market volatility risk, investment loss, liquidity management issues, regulatory changes, and COVID-19 uncertainty.  

Outlook:

• TOP is positive regarding growth in holdings of ACM (Australian Community Media) and MNY (Money3 Corporation Limited) and the earnings growth potential of the core infrastructure and resource services firms in the portfolio. It aims to reduce and eliminate the discount of market share price to NTA and undertake initiatives to achieve this goal.
• TOP endeavours to equalise the interim and final dividends and expects growth in total dividend in FY22.

Stock Recommendation: The stock of TOP gave a negative return of ~8.25% in the past three months and a negative return of ~15.96% in the past six months. The stock is currently trading lower than the 52-weeks’ average price level band of $0.485 - $0.615. On a TTM basis, the stock of TOP is trading at a price to book value multiple of 0.7x, lower than the industry (Investment Banking & Investment Services) median of 1.0x, thus seems undervalued. Considering the current trading levels, robust portfolio outperformance, consistently paying higher dividends since FY16, valuation on a TTM basis, earnings upside potential in the resources sector, and associated key business risks, we give a ‘Speculative Buy’ rating on the stock at the closing market price of $0.500, up by ~1.010%, as of 23 May 2022. Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

TOP Daily Technical Chart, Data Source: REFINITIV  

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

Note 2: Investment decision should be made depending on the investors’ appetite on 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 uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

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