Ridley Corporation Limited

 
RIC Details

H1FY21 Performance Update: Ridley Corporation Limited (ASX: RIC) is engaged in the production of quality, high-performance animal nutrition solutions. The market capitalisation of the company as on 17 March 2021, stood at ~$386.58 million. During H1FY21, the company reported an increase in consolidated EBITDA to $34.2 million, up by $18.7 million from the previous corresponding period. The net profit stood at $11.5 million during the period, compared to $0.4 million in H1FY20. The cash position of the company was $35.2 million as on 31 December 2020, from $45.8 million on June 2020.

H1FY21 Financial Performance (Source: Company Reports)

Outlook: The company will look to improve on its core business going forward. It believes that there are significant opportunities within the company to simplify the business, install automation and leverage its raw material procurement to rationalise the supply chain. It expects an uptick in earnings in the second half of FY21.

Valuation Methodology: P/E Multiple Based Relative Valuation (Illustrative)

Data Source: Refinitiv, Thomson Reuters, Analysis by Kalkine Group

*% Premium/(Discount) is based on our assessment of the company’s NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

Stock Recommendation:  The company has undergone a business restructure in July 2020 and has adopted two reporting segments of Bulk Stockfeeds and Packaged Feeds & Ingredients. As per ASX, the stock of RIC is trading close to its 52-weeks’ high level of $1.210. The stock of RIC gave a positive return of ~64.13% in the past nine months and a positive return of ~16.66% in the past one week. On a technical analysis front, the stock of RIC has a support level of ~$1.138 and a resistance level of ~$1.269. We have valued the stock using a P/E multiple-based illustrative relative valuation and have arrived at a correction of low single-digit (in % terms). We believe that the company might trade at a slight premium to its peer median P/E (NTM trading multiple), considering the improved EBITDA performance and an increase in operating cash flow in H1FY21. For the purpose, we have taken peers such as Elders Limited (ASX: ELD), Inghams Group Limited (ASX: ING), Wellard Limited (ASX: WLD), to name a few. Considering the current high trading levels, recent rally in the stock price, reduction in the cash level of the company and the key risks associated with the business, we suggest investors to book profits and give a ‘Sell’ rating on the stock at the current market price of $1.190, down by 1.653% as on March 17, 2021.

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

Actinogen Medical Limited

ACW Details

Business Update: Actinogen Medical Limited (ASX: ACW) is a biotechnology company that develops therapy for neurological, psychiatric, and metabolic diseases associated with chronically elevated cortisol. The market capitalisation of the company as on 17 March 2021, stood at ~$51.47 million. As per a recent update, the company has appointed Dr Steven Gourlay as its Chief Executive Officer effective from 15 March 2021.

H1FY21 Results Update: During the period, the company reported a decrease in revenue from ordinary activities to $16,313, compared to revenue of $58,058 in the pcp. The net loss narrowed down to $2,357,619 from $4,040,509 during the same period under consideration, reflecting a decrease in the expenditure.

H1FY21 Financial Performance (Source: Company Reports)

Outlook: The company is developing its compound, Xanamem, as a potential therapy for Alzheimer’s disease, Fragile X syndrome, schizophrenia and diabetes. These given medical conditions are impacting the patients and there is medical need and scope for new and improved treatments in this segment.

Stock Recommendation:  The cash position of the company improved to $12.91 million as on 31 December 2020, compared to $5.04 million on 30 June 2020. As per ASX, the stock of ACW is trading close to its 52-weeks’ high level of $0.035. The stock of ACW gave a positive return of ~116.83% in the past one year and a positive return of ~54.54% in the past one month. On a technical analysis front, the stock of ACW has a support level of ~$0.027 and a resistance level of ~$0.035. Considering the current high trading levels, steep rise in price levels in the past few months, decrease in revenues and the key risks associated with the business, we suggest investors to book profits and give a ‘Sell’ rating on the stock at the current market price of $0.034, up by 9.677% as on March 17, 2021.

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

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