Alpha HPA Limited

A4N Details

Alpha HPA Limited (ASX: A4N) is a specialty metals and technology company with an emphasis on the commercialization of its proprietary licensed solvent extraction (SX) and refining technology to produce High Purity Alumina (HPA) and related product for lithium-ion battery and light-emitting diode lighting markets.

Result Performance – For the First Half Ended 31 December 2020 – (H1FY21)

• Other income of the company increased to $874.7k in H1FY21 as compared to $197.5k in H1FY20. However, financial income fell to $6.3k in H1FY21 from $22.95k in H1FY20
• The company reported a significant rise in operating loss before financing income to $7.61 million in H1FY21 versus $5.22 million in H1FY20
• Total comprehensive loss for H1FY21 stood at $7.73 million versus $5.16 million in H1FY20

Key Data (Source: Company Reports)

Q4FY21 Quarterly Activity Report and Cash Flow Report for the Quarter Ended 30^th June 2021

• Fast-track commercialization of two ultra-high purity precursor products
• Facility is expected to be built at the site in Gladstone
• $27 million CAPEX fully funded after successful completion of fund $50 million through private placement
• The company expects the first production in July-August 2022
• The company had cash and cash equivalents of $50.34 million as of 30^th June 2021 

Outlook:

The HPA First Project is expected to commercialize its production of ~10,000tpa equivalent of high purity alumina (HPA) and related products. Further, the company finalized the Definitive Feasibility Study (DFS) in March 2020 following a pilot plant campaign. This strengthened its Brisbane facility to prove its scale and has now recorded over 2,000 operating hours. On the financial front, the company is completely funded for commercialization at its Precursor Production Facility (PPF) which is expected to start commercial production from August 2022. The company is now in developed phase of project permitting, market outreach, and project financing processes for the full-scale HPA First Project.

Key Risks:

The main risks arising from the financial instruments of the company are market risk, credit risk, and liquidity risks. Also, the company is yet to generate revenue and cover its operational expenses.

Stock Recommendation

The stock reported 9-months and 1-year returns of ~+70.5% and ~+136.4%, respectively. The 52-week high price of the stock is $0.675 and 52-week low price is $0.200. The stock has a support of around $0.45 and a resistance of $0.55.

Considering the aforesaid facts, current trading level, and risks associated, we suggest investors to liquidate the stock.

Hence, we give a “Sell” recommendation on the stock at the current market price of $0.545 per share, (Time: 11:55 AM (GMT+10), Sydney, Australia) on 3^rd September 2021.

Daily Price Chart

Source: REFINITIV, Note: The Purple Color Line Reflects RSI (14-Period)

Note 1: The reference data in this report has been partly sourced from REFINITIV.

Note 2: Investment decisions 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 analysis has been achieved and subject to the factors discussed above alongside support levels provided.

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.

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