Peninsula Energy Limited

PEN Details

Peninsula Energy Limited (ASX: PEN) happens to be the uranium producer.

Result Performance (FY21 Ended 30 June 2021)

• Total revenue from continuing operations for the full-year period stood at $9.78 million, as compared to $6.08 million in the previous year. An increase in pounds sold in 2021 and a higher recognised revenue per pound in the current year has resulted in an improvement in gross profit in 2021 to US$1.3 million.
• The loss before interest and tax from continuing operations is lower in 2021 at US$0.9 million (US$1.9 million in 2020) as a result of both the improved gross margin and the significant reduction in corporate and administration expenses in 2021.

Key Data (Source: Company Reports)

Outlook:

The company continued to focus towards the progression of the MU1A low-pH field demonstration at the Company’s flagship, 100%-owned Lance Project located in Wyoming, USA. The field demonstration of low-pH In-Situ Recovery (ISR), which started in August 2020, is designed to provide key data on pattern configurations, pH adjustment, acid consumption, solids handling and oxidants ahead of a decision to restart production at the Project.

Recent Update:

Recently, PEN has made an announcement that 1,466,613 are to be issued for the total consideration amounting to A$363,133.0. This implies a per share value of A$0.248. Notably, the proposed issue date is 30^th November 2021.

Risks:

PEN is exposed to the credit risk, liquidity risk as well as market risk. Liquidity risk arises from the possibility that the company might witness difficulty in settling the debts or otherwise meeting the obligations related to the financial liabilities.

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

Technical Overview:

Chart:

Source: REFINITIV

Note: Purple Color Line Reflects RSI (14-Period)

Stock Recommendation:

The stock price of the company rose by ~62.9% in 9 months. It has made a 52-week low and high price of $0.060 and $0.350, respectively.

The stock has been valued using EV/Sales multiple based illustrative relative valuation method and arrived at a target price which reflects a rise of low double-digit (in percentage terms). A slight premium has been applied to EV/Sales Multiple (NTM) (Peer Average) considering higher sales revenue, growth in total assets in FY 2021 on the YoY basis as well as decent outlook.

Considering the aforesaid facts, we give the “Speculative Buy” recommendation on the stock at the current market price of A$0.220 per share (Time: 11:29 AM (GMT +10), Sydney, Australia)  as on 8^th October 2021.

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.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

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