Altech Chemicals Limited

ATC Details

Latest Updates: Altech Chemicals Limited (ASX: ATC) is involved in the development of a processing plant in Johor, Malaysia, to manufacture and supply ~99.99% (4N) high purity alumina (HPA) (Al₂O₃).

1. Changes in Shareholding:

1. On 7 April 2022, ATC issued ~671,926 shares at ~$0.08 per share upon the exercise of ~671,926 listed options (ASX: ATCOB).
2. Kaolin Resource Expansion at the Kerrigan Deposit: ATC reported an Inferred Resource of ~125 million tonnes, up ~47% on the last Geos Mining 2011 estimate of ~85 million tonnes and based on the latest exploration finished on the deposit.

HPA Project Development in 1HFY22 (ended 31 December 2021):

• During 1HY22, undertook ~$8.1 million share placement with investors at ~$0.107 per share to raise finance for the preliminary feasibility study (PFS) for constructing the HPA battery materials coating plant, working capital, etc.
• Altech Industries Germany GmbH (a ~75% subsidiary) has started conducting a PFS to construct a ~10,000 tonnes per year battery materials plant project.

Cash & Cash Equivalents, Highlights; (Analysis by Kalkine Group)

Key Risks: The company faces exploration risk, demand, and supply changes for HPA, technological shifts, and fundraising at effective cost. 

Project Plans:

• ATC plans to develop the Kerrigan project as a stand-alone project to facilitate a lucrative divestment if feasible.
• Through its proprietary coating technology, ATC plans to produce alumina coated silicon / graphite anode materials for the EV and lithium-ion battery markets. It is well-positioned (plant site per se) to provide alumina coated anode materials to markets in Europe.
• ATC continues to engage with multiple parties for the proposed green bond offering (~US$144 million) and a potential equity raise to seek financing for the HPA project in Malaysia.

Stock Recommendation: The stock of ATC gave a negative return of ~33.33% in the past three months and a negative return of ~18.36% in the past six months. The stock is currently trading lower than the 52-weeks’ average price level band of $0.041 - $0.150. On a TTM basis, the stock of ATC is trading at a price-to-book value multiple of ~1.2x lower than the industry (Metals & Mining) median of ~2.4x, thus seems undervalued. Considering the current trading levels, robust demand from the battery and EV markets in Europe, plant site advantages, project financing initiatives, valuation on a TTM basis, and associated key business risks, we give a ‘Speculative Buy’ rating on the stock at the current market price of $0.077, as of 12 April 2022, 2:43 PM (GMT+10), Sydney, Eastern Australia. 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.

ATC 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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