BPH Energy Ltd

BPH Details

An Update on Cortical Dynamics: BPH Energy Ltd (ASX: BPH) operates by investing in biotechnology entities and an oil and gas exploration companies. The company's principal activities include Molecular Discovery Systems (MD Systems), HLS5 Project, Cortical Dynamics, Diagnostic Array Systems (DAS) and Advent Energy Limited. The company’s investee Cortical Dynamics has announced regarding the acceptance of its “Project Analgesia Investigation” by the Medical Device Partnering Programme (MDPP). Cortical Dynamics has utilised the Brain Anaesthesia Response Monitor (BARM) technology for its project.

1HFY21 Financial Highlights: The company has registered a significant decline in its interest revenue to $32,237 in 1HFY21 as compared with $165,526 in 1HFY20, due to conversion of BPH’s loans to Cortical Dynamics Limited equity. The company has registered a loss of $1.17mn in 1HFY21 on the back of loss posted from the company’s associate (Advent Energy Limited) and a share-based payment expense of $802,997 during the period. BPH has seen a significant uptick in its cash and cash equivalent position to $2.35mn as on 1HFY21 as compared with $0.25mn as on 2HFY20.

Cash Situation (Source: Company Reports)

Outlook: As per the company reports, BPH’s investee Cortical will align its business activities with South Korean Distributors (Global Luck) to establish BARM to the Korean markets. Another investee, Add Energy is likely to initiate drilling activities at Baleen well after reviewing rig availability. 

Stock Recommendation: In the last six months, BPH has increased by ~63.26% and increased by ~90.47% in the last three months. The current market capitalisation of BPH stands at ~$58.51mn as of 7 April 2021. The stock is currently trading below the average 52-weeks’ price level range of ~$0.006-~$0.330. On the technical analysis front, the stock has a support level of ~$0.061 and a resistance of ~$0.098. On a TTM basis, the stock of BPH is trading at a Price/Book Value multiple of 8.4x, higher than the industry median (Biotechnology & Medical Research) of 5.4x. Considering the steep price movement in the past few months, valuation on TTM basis, and current trading levels, we are of the view that most of the positive factors have been discounted at the current juncture. Hence, we suggest investors to wait for better entry level and give an “Expensive” rating for the stock at the current market price of $0.080, down by 9.091% on 7 April 2021.

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

Carnarvon Petroleum Limited

CVN Details

Update on Buffalo Project: Carnarvon Petroleum Limited (ASX: CVN) is actively engaged in oil and gas exploration, development, and production. The company is holding interest in various oil projects such as Cerberus project mainly engaged in hydrocarbon accumulations, Buffalo Oil Project, engaged in oil discoveries through its different oil wells. The company has offered its Buffalo project and Buffalo-10 to Advance Energy Plc. For further development, Advance Energy, after getting due approvals from its shareholders and investors, will get 50% interest in the Buffalo Project. Advance energy will carry out business activities at Buffalo-10 well to a maximum cap of US$20mn over which CVN will take over the business expenses.  

1HFY21 Financial Highlights: The company has registered a decline in its other income to $0.35mn in 1HFY21 as compared with $0.74mn in 1HFY20. CVN has registered a loss in 1HFY21 to $4.25mn on the back of unrealised foreign exchange losses amounting to $1.58mn. The company has registered a decline in its cash position as on 1HFY21 to $105.76mn from $113.63mn as on 2HFY20. The decent balance sheet position will let the company to spend on its planned capital expenditure, mainly for Dorado FID in 2022. 

Cash Position (Source: Company Reports)

Key Risks: The company is present in energy segment, any fluctuation in the energy prices may impact the financials of the company. The company require regulatory approvals to carry out its business, any delay in getting regulatory approvals may result in financial losses for the company.

Outlook: As per the company reports, the company will explore the prospects for Dorado field. The Apus and Pavo wells near Dorado project are the prospective projects for drilling in late 2021 or early 2022. The company is planning to commence engineering tasks at Dorado project and proceed towards selecting production vessel contractor (FPSO), going forward.   

Stock Recommendation: In the last one month, CVN has decreased by ~1.85% and by ~11.66% in the last three months. The current market capitalisation of CVN stands at ~$406.99mn as of 7 April 2021. The stock is currently trading above the average 52-weeks’ price level range of ~$0.150-~$0.335. On the technical analysis front, the stock has a support level of ~$0.25 and a resistance of ~$0.29. On a TTM basis, the stock of CVN is trading at a Price/Book Value multiple of 1.7x, lower than the industry median (Oil & Gas) of 2.1x. Considering the CVN’s tie up with Advance Energy Plc to develop Buffalo project, valuation on TTM basis, decent outlook, current trading levels and key risks associated with the business, we recommend a “Speculative Buy” rating on the stock at the current market price of $0.260 as on 7 April 2021.

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

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