Carnarvon Petroleum Limited

CVN Details

Operating Highlights: Carnarvon Petroleum Limited (ASX: CVN) is engaged in the exploration and production of oil and gas. As on 15 October 2020, the market capitalization of the company stood at ~$359.8 million. During FY20, the company completed the Dorado appraisal drilling campaign and reported decent results in Caley and Baxter reservoirs during the Dorado-3 appraisal well. The Dorado’s project development is designed to accommodate liquids production of ~100,000 barrels per day with the operator providing initial flow rate guidance of 75,000 to 100,000 barrels per day.

FY20 Financial Results: During FY20, the company reported a fall in after-tax losses to $4.13 million, down from $8.02 million in FY19. In the same time span, the company reported a strong and healthy balance sheet with no debt and a cash balance of $113.63 million. It also completed a capital raising through a placement to sophisticated and institutional investors raising $78.67 million after fees.

FY20 Financial Highlights (Source: Company Reports)

Stock Recommendation: CVN has maintained a consistent strategy that seeks to identify high quality technically driven opportunities and has identified significant prospects nearby the Dorado discovery. As per ASX, the stock of CVN is inclined towards its 52-weeks’ low level of $0.110, proffering a decent opportunity for accumulation. The stock of CVN gave a return of 26.31% in the past three months and a return of 23.07% in the past one month. On a TTM basis, the stock of CVN is trading at a price to book value multiple of 1.5x, lower than the industry average (Oil & Gas) of 2.3x, and thus seems undervalued. On a technical front, the stock of CVN has a support level of ~$0.205 and a resistance level of ~$0.292. Considering the current trading levels, falling losses and healthy balance sheet, decent returns in the past three months, fluctuations in oil prices and lower P/BV multiple, we recommend a ‘Speculative Buy’ rating on the stock at the current market price of $0.245, up by 6.521% on 15 October 2020.

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

Argosy Minerals Limited

AGY Details

500KG High Purity Li2CO3 Delivered to Japanese Customer: Argosy Minerals Limited (ASX: AGY) is engaged in the development of the Rincon Lithium Project and did the acquisition of the Tonopah Lithium Project. As on 15 October 2020, the market capitalization of the company stood at ~$54.03 million. The company has announced that it has delivered the 500kg high purity lithium carbonate product sample to a Japanese battery cathode end-user customer. This larger 500kg product sample reflects the next phase of the product qualification process and proves the successful environmentally clean chemical process.

Financial Highlights: During 1H20, other income of the company stood at $57.57k, reflecting an increase from $35.89k in 1H19. In the same time span, the company witnessed a loss of $1.38 million in 1H20, slightly higher than the loss of $1.32 million in the pcp. During the half year, the company reported a healthy balance sheet with a cash balance of $4.40 million and net assets of $23.23 million.

1H20 Financial Highlights (Source: Company Reports)

Stock Recommendation: The company retains healthy project fundamentals and seems a strong beneficiary of the lithium sector. As per ASX, the stock of AGY is inclined towards its 52-weeks’ low level of $0.026, offering a decent opportunity for the investors to enter the market. The stock of AGY gave a return of 31.25% in the past six months and a return of 7.14% in the last one month. On a technical front, the stock of AGY has a support level of ~$0.0302 and a resistance level of ~$0.0947. On a TTM basis, the stock of AGY is trading at a price to book value multiple of 2.3x, lower than the industry median (Basic Materials) of 2.6x, and thus seems undervalued. Considering the current trading levels, modest returns in the past three months, decent liquidity position, lower P/BV multiple and key risks, we recommend a ‘Speculative Buy’ rating on the stock at the current market price of $0.0525, down by 0.944% on 15 October 2020.

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

Indoor Skydive Australia Group Limited

IDZ Details

Opening of Freak Entertainment Bondi Junction: Indoor Skydive Australia Group Limited (ASX: IDZ) is engaged in the operation of indoor skydiving facilities. As on 15 October 2020, the market capitalization of the company stood at ~$6.06 million. The company has announced that FREAK Entertainment is opening its third venue, FREAK Westfield Bondi Junction. The company through FREAK Entertainment will bring free roam Virtual Reality into its Westfield Living Centres.

FY20 Financial Performance: During FY20, the company generated revenues of $5.0 million and managed to reduce its expenses by 30%. In the same time span, the company reported statutory earnings before interest, tax, depreciation and amortisation of ($2,565,397) as compared to ($4,753,949) in 2019.

FY20 Financial Highlights (Source: Company Reports)

Stock Recommendation: Over the next year, the company will continue to deliver on its strategy of repair, growth, and diversification. It is also focused on further centres within the Greater Sydney region. IDZ is likely to report a decent performance with the continued improvement of the wind tunnel operations along with the growth and diversification strategy implementation. As per ASX, the stock of IDZ is trading at attractive levels but seems very speculative given its low market capitalization. On a technical front, the stock of IDZ has a support level of ~$0.002 and a resistance level of ~$0.041. Considering the current trading levels, falling revenues and softer market conditions, we suggest our investors to keep an eye on the business activities and recommend an ‘Avoid’ rating on the stock at the current market price of $0.014, down by 22.223% on 15 October 2020.

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

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