This report is an updated version of the report published on the 15 September 2023 at 4:20 PM AEST.
Champion Iron Ltd (ASX: CIA)
Champion Iron Ltd (ASX: CIA) is an ASX listed iron ore exploration and development entity with major projects in the southern Labrador Trough, Canada’s largest source of iron ore.
Recommendation Rationale – SELL at AUD 6.63
- Profit Booking: CIA’s share price surpassed the R2 level suggested in the previous report on 16 August 2023; hence, it is giving a profit booking opportunity.
- Overvalued Multiples: On a forward 12-month basis, key valuation multiples (EV/Sales, EV/EBITDA, Price/Book, Price/ Cash Flow, and Price/Earnings) are higher than the median of the Basic Materials’ sector.
- Technical Standpoint: The momentum oscillator, 14-day RSI (~67.65) is approaching the overbought level; and thus, price can retrace from the current levels.
- Financial Decline: During FY23, revenue and EBITDA reported a decline of 4% and 47% YoY, respectively. Moreover, costs are likely to increase due to inflationary pressures on fuel and explosives.
CIA Daily Chart
(Source: REFINITIV, Analysis by Kalkine Group)
Considering that the resistance level, and risks associated, it is prudent to exit at the current levels. Hence, a ‘Sell’ recommendation is given on the stock at the current price of AUD 6.63 (as 15 September 2023, at 2:48 PM AEST).
Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical issues prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.
Note 1: Past performance is neither an indicator nor a guarantee of future performance.
Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is 15 September 2023. The reference data in this report has been partly sourced from REFINITIV.
Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.
Note 4: Dividend Yield may vary as per the stock price movement.
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