Horizon Oil Limited

HZN Details

Strong Financial Position: Horizon Oil Limited (ASX: HZN) is involved in the exploration, development, and production of petroleum. The market capitalisation of the company stood at ~$71.61 Mn as on 10^th September 2020. Recently, the company announced the appointment of Bruce Clement as an Independent Non-Executive Director, effective 1^st September 2020. For FY20, the company reported a production volume of 1.48 million bbls, which came at an upper end of the guidance range. Oil sales for the period stood at 1.43 million barrels at an average realised oil price of US$58.86/bbl, reflecting a fall of 8% over pcp. Due to global challenges caused by COVID-19, the company posted subdued financial results. Sales revenue and EBITDAX for the period stood at US$84.0 million and US$50.6 million.

Key Financial Summary (Source: Company Reports)

Outlook: The company stated that its growth in FY21 and beyond would be supported by continued strong oil production from its China and New Zealand operations. In addition, the company continues to focus on progressing opportunities to realise value from its PNG resources in the near term. The company has scheduled to conduct its Annual Shareholders Meeting on 20^th November 2020.

Key Risks: The company’s strategic objective could be impacted by macro-economic and other risks, which include global growth, volatile commodity prices, exchange rates, climate change, access to financing and political risks. In addition, the business is also sensitive to production and development risk, exploration and drilling risks, joint operations risk, and geological risk surrounding resources and reserves.

Stock Recommendation: The current ratio of the company stood at 1.65x in 1H FY20 as compared to the industry median of 1.09x, reflecting HZN’s decent position to pay its short-term obligations. Debt to equity of the company stood at 0.38x in 1H FY20 against the industry median of 0.52x. On TTM basis, HZN has an EV/Sales multiple of 0.6x, which is lower than the industry median (Oil & Gas) of 22.3x. HZN is trading at a price to book value multiple of 0.6x against the industry median of 1.2x on TTM basis. The stock is inclined towards its 52-week low level of $0.042, offering decent opportunities for accumulation. On the technical analysis front, the stock of the company has a support level of ~A$0.051 and a resistance level of ~A$0.066. Therefore, considering the decent liquidity position, deleveraged balance sheet and key risks within the business, we give a “Speculative Buy” recommendation on the stock at the current market price of $0.055 per share on 10^th September 2020.

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

Crowd Media Holdings Limited

CM8 Details

Inking of Exclusive Distribution Agreement: Crowd Media Holdings Limited (ASX: CM8) is in the sale of information, entertainment and content and utility services for mobile phones and tablets. The market capitalisation of the company stood at $8.87 Mn as on 10^th September 2020. The company has inked a 3-year exclusive distribution agreement with USA-based MD Professional. As per the agreement, CM8 will sell MD Complete’s cruelty-free, vegan skin care brand into the European market via www.MDComplete.eu as well as on the Amazon e-commerce marketplace. The agreement aims to leverage the core strengths of CM8 to generate sales via web and mobile for the MD Complete products in Europe. 

A Look at FY20 Results: During FY20, the company recorded revenue amounting to $16,480,683 against $23,918,776 in FY19, while EBITDA loss for the period stood at $1,071,400 over $5,587,379 in FY19. The company earned a revenue of $0.35 million from the newly established Crowd Direct (Direct to Consumer) division. During the year, Crowd Direct reached distribution deals with KINN-Living, Teadora, London Labs, Vital and I am Kamu. The net cash used in operating activities stood at -$1,797,144-, reflecting an improvement of 26% against the prior period cash used of -$2,443,352.

Financial Summary (Source: Company Reports)

What to Expect: For FY21, the company is expecting marginal growth in EBITDA, NPAT and operating cashflow. In addition, CM8 is anticipating revenue growth in new Crowd Direct Division. The company has scheduled to conduct its Annual Shareholders Meeting on 23^rd November 2020.

Key Risks: The business activities of the company are exposed to financial risks, such as market risk (including foreign currency risk, price risk and interest rate risk), credit risk and liquidity risk. In addition, CM8’s overall risk management program is focused on the unpredictability of financial markets. The aim is to minimize potential negative effects on the financial performance.

Stock Recommendation: The company is likely to launch 6 new brands in the new Crowd Direct Division. CM8’s continued investment and focus on R&D are likely to develop its conversational commerce influencer platform technology. Debt to equity of the company stood at 7.52x in 1H FY20, as compared to 0.89x of 1H FY19. The 52-week low-high range for the stocks stands at0.010-$0.036. Hence, considering its leveraged balance sheet and declining top-line and bottom-line performance, we suggest investors to avoid the stock at a current market price of $0.022 per share down by 4.348% on 10^th September 2020.

CM8 Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

Aus Tin Mining Ltd

ANW Details

Announcement for Entitlement Offer: Aus Tin Mining Ltd (ASX: ANW) is engaged in the exploration for tin, nickel, and other commodities. The market capitalisation of the company stood at $3.22 Mn as on 10^th September 2020. Recently, the company announced a non-renounceable Entitlement Offer to raise up to around $3,051,996 before costs at an issue price of $0.001 each for every 1 share held.

Sources and Uses of Funds (Source: Company Reports)

A Look at June 2020 Quarter: During June 2020 quarter, the company implemented a non-binding term sheet setting out the agreed commercial terms for a farm-in on three exploration licences detained by Lachlan Copper. In addition, the company is likely to strengthen its balance sheet through a rights issue to raise at least $1.2 million in cash and the conversion of a minimum of $1.66 million worth of debt into equity. The company is likely to conduct its Annual Shareholders Meeting on 19^th November 2020.

Key Risks: The company is sensitive to various risks, which arises from its use of financial instruments. These risks primarily include credit risk, liquidity risk and market risk.

Stock Recommendation: The company’s 2020 strategy is focused on diversifying commodity base, leveraging existing assets, simplifying portfolio with exploration & development and strengthening the balance sheet. Debt to equity of the company stood at 0.42x in 1H FY20 as compared to the industry median of 0.21x. The stock of ANW has moved up by 50% in the past one month. On the technical analysis front, the stock price has a support level of ~A$0.001 and a resistance level of ~A$0.008. Thus, in lieu of the higher debt, low cash balance, key risks and low market capitalisation, we suggest investors to avoid the stock at the current market price of $0.001 per share as on 10^th September 2020.

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

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