Stocks’ Details

Mali Lithium Limited

Equity Raising for Business Expansion: Mali Lithium Limited (ASX: MLL) is engaged in the development and exploration of minerals with a market capitalisation of $54.8 million as on 25^th September 2020. Recently, the company has opened its share purchase plan (SPP) to raise $6 million, wherein the company will be offering eligible shareholders with an opportunity to purchase up to $30,000 worth of new fully paid ordinary shares at a price of $0.16 per new share. The SPP is likely to close on 21^st October 2020. Previously, the company has also raised $64 million (before costs) via placement of around 402 million shares to professional and sophisticated investors. The company would use the funds mainly to finance the acquisition of 80% interest in the Morila Gold Mine in Mali. Funds would also be used to finish a new mine plan and for general working capital purpose.

Use of Funds (Source: Company Reports)

Receipt of Stimulus Package: For the half-year ended 30^th June 2020, the company reported a net loss after tax amounting to $1,072,595 as compared to $1,990,962 in 1H FY19. During the half, the company received COVID-19 stimulus package of $50,000 from the Federal Government. In addition, the company is also likely to receive an additional $50,000 in four equal payments.

Outlook: The long-term growth of the company revolves around underground mining possibilities and regional acquisitions and consolidation. The company is scheduled to conduct its General Meeting on 23^rd October 2020.

Stock Recommendation: In the past one month, the stock of MLL has provided a return of 14.81%. The 52-week low-high range for the stock stands at $0.040-$0.220, respectively. On a TTM basis, the stock is trading at a price to book value multiple of 2.1x as compared to the industry average (Basic Materials) of 7.4x. On the technical analysis front, the stock of the company has a support level of ~A$0.119 and a resistance level of ~A$0.222. Therefore, considering the recent capital raising, acquisition of Morila Gold Mine, improving bottom line and key risks associated with the business, we give a “Speculative Buy” recommendation on the stock at the current market price of $0.155 per share, up by 3.333% on 25^th September 2020.

Compumedics Limited

Profitable Underlying Business in FY20: Compumedics Limited (ASX: CMP) is engaged in the development and commercialisation of technology in computer-based patient monitoring and diagnostic systems. The market capitalisation of the company stood at $69.98 Mn as on 25^th September 2020. During FY20, the company experienced an adverse impact of COVID-19 on all parts of its business, excluding the neurology business.  For the year ended 30^th June 2020, the company reported revenue from shipped and invoiced sales of $35.1 million, reflecting a fall of 15.5%. As a result of the immediate and substantial action taken for COVID-19, the underlying business of the company was profitable. Underlying NPAT for the period amounted to $1.8 million in FY20 as compared to $4.0 million in FY19. In addition, the company managed to secure sales orders of $35.2 million during the year.

Key Financials (Source: Company Reports)

Outlook: For FY21, the company is focused on the launch of the new product platform, and expansion of neuroscan in MEG brain analysis imaging market.

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

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

Note: All the forecasted figures are taken from Thomson Reuters, NTM: Next Twelve Months

* Assumption: Considered Same Net Debt for FY21 as in FY20.

Stock Recommendation: As on 30^th June 2020, the cash balance of the company stood at $6.4 Mn. The stock of CMP has provided a return of 34.48% in the past six months. The stock of CMP is inclined towards its 52-week low level of $0.250, offering decent opportunities for accumulation. We have valued the stock using an EV/Sales multiple based illustrative relative valuation method and arrived at a target price, which is offering an upside of lower double-digit (in percentage terms). For the purpose, we have taken peers like Somnomed Ltd (ASX: SOM), Cyclopharm Ltd (ASX: CYC), Palla Pharma Ltd (ASX: PAL). On the technical analysis front, the stock of the company has a support level of ~A$0.359 and a resistance level of ~A$0.450. Therefore, considering the profitable underlying business, decent sales order and key risks, we give a “Speculative Buy” recommendation on the stock at the current market price of $0.390 per share, down by 1.266% on 25^th September 2020.

G Medical Innovations Holdings Limited

COVID-19 Impacted Topline in 1H FY20: G Medical Innovations Holdings Limited (ASX: GMV) specialises in innovative next-generation mobile and e-health solutions and services. For the half-year ended 30th June 2020, the company recorded revenue amounting to US$2.01 million as compared to US$2.908 million in 1H FY19 due to the impact of COVID-19 pandemic. In addition, the company experienced a decline in the cost of revenues to US$2.53 million against US$2.68 million in 1H FY19. GMV posted a fall in operating expenses to US$4.11 million as compared to US$6.982 million in pcp because of GMV’s decision to execute operational efficiencies. Net loss for the half-year amounted to US$4.9 million, which reflects an improvement of 28% from 1H FY19. The company closed the half-year with cash and cash equivalents of $543k. In the month of August 2020, a new revenue stream has been introduced to its Independent Diagnostic Testing Facilities (IDTF) platform.

Key Financials (Source: Company Reports)

Stock Details: On 21^st September 2020, the company requested ASX to grant suspension on its securities as the company is seeking to delist its securities from ASX and looking to list its securities on NASDAQ stock exchange by Q4 2020. GMV believes that NASDAQ listing would deliver a more favourable valuation as well as better coverage to a larger market. The company has sought approval from its shareholders in General Meeting for delisting of securities, which was conducted on 21^st September 2020. The securities of the company would be suspended until the removal of securities from the list of ASX. The stock last traded at $0.039.

Comparative Price Chart (Source: Refinitiv, Thomson Reuters)

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