Stocks’ Details

Sabre Resources Limited

Identification of New Drill Targets: Sabre Resources Limited (ASX: SBR) is engaged in mineral exploration with a market capitalisation of ~$15.01 Mn as on 23^rd September 2020. Recently, the company has recognised three major new drill targets following the results of the airborne magnetic survey at the Bonanza Project. As of now, the company is seeing an extension of the airborne magnetic survey in addition to the west and to the south of the area surveyed. Furthermore, SBR is working on a drilling program and would conduct drilling at earliest.  For FY20, the company reported revenue amounting to $23,742 as compared to $43,881 in FY19. The operating loss for the year amounted to $721,146 against $14,551,815 in FY19. In addition, the company experienced a decline in net assets to $11,461,565 from $12,393,961 in FY19.

Financial Summary (Source: Company Reports)

Outlook: For FY21, the company will be focused on the aeromagnetic survey on EL57/1125, for which the company has appointed geophysical contractor Pegasus Airborne System. The company has scheduled its 2020 Annual General Meeting on 21^st October 2020.

Stock Recommendation: The stock of SBR has moved up by 380% and 1100% in the past three and six months, respectively. The stock is slightly above the 52-week low-high average of $0.001-$0.020, respectively. On the technical analysis front, the stock of SBR has a support level of ~$0.011 and a resistance level of ~$0.016. Hence, considering the low market capitalisation, declining top-line and  price movement in the past months, we suggest investors to avoid the stock at the current market price of $0.013 per share, up by 8.333% on 23^rd September 2020, owing to the release of the airborne magnetic survey results.

Whitehawk Limited

Automation of Product Lines: Whitehawk Limited (ASX: WHK) operates an internet-based cybersecurity marketplace. The market capitalisation of the company stood at ~$23.99 Mn as on 23^rd September 2020. Recently, the company announced that the Cyber Risk Scorecard Product Line is currently 100% automated and incorporated the latest U.S. Department of Defense Cybersecurity Maturity Model Certification (CMMC) mapping into the online maturity model. In addition, the advancement of product line allows the company to increase scaling and speed to delivery of all current and future clients.

Decent Growth in Top-line: For the half-year ended 30^th June 2020, the company reported revenue amounting to US$ 585,835 as compared to US$ 284,870 in 1H FY19. The revenue growth was supported by rising product lines and expanded sales channels, mostly large governmental agencies. The company managed to close the Q2 FY20 with a strong cash position of US$1.5 million and a strong pipeline of sales contracts. Subsequent to 1H FY20, the company secured a U.S. Government Cyber Risk Radar Contract with an annual base of US$580,000. In addition, the contract has the option of an additional US$600,000 per annum in services each year, for up to 5 total years.

Key Financials (Source: Company Reports)

Outlook: For FY20, the company continues to actively place its Cyber Risk Radar in the Defense Industrial Base and key US Federal Government Departments. In addition, the company is focused on its large and potentially game-changing contracts and opportunities.

Stock Recommendation: Gross margin of the company stood at 52.7% in 1H FY20, reflecting YoY growth of 12.6%. The stock of WHK gave positive returns of 35% in the last three months. The 52-week low-high range for the stock stands at $0.025-$0.205, respectively. On the technical analysis front, the stock of WHK has a support level of ~$0.126 and a resistance level of ~$0.160. Hence, considering the recent automation of product lines, growth in revenue, contract from U.S. Government and key risks, we give a “Speculative Buy” recommendation on the stock at the current market price of $0.145 per share, up by 7.407% on 23^rd September 2020.

Latin Resources Limited

Capital Raising for Exploration Work: Latin Resources Limited (ASX: LRS) is in the exploration and evaluation of mining projects in Peru, Brazil and Argentina. The market capitalisation of the company stood at $21.73 Mn as on 23^rd September 2020. Recently, the company announced that it has raised $652,000 through the placement of 59,272,728 shares at an issue price of $0.011 to sophisticated and professional investors. In addition, the placement was oversubscribed by $102,000. The company would use the funds to finance exploration work on its Yarara gold project in NSW, project development, maintain its South American mineral properties as well as for working capital. During 1H FY20, the company recorded revenue amounting to $221 as compared to $464 in 1H FY19. The net loss for the half-year amounted to $2,299,681 against $2,573,216 in pcp.

Key Financial Summary (Source: Company Reports)

Outlook: For FY20, the company would continue to look for other opportunities within South America, which is likely to create value for its shareholders.

Stock Recommendation: In the past one and three months, the stock of LRS has moved up by 118.18% and 300%, respectively. As a result, the stock is trading close to its 52-week high of $0.028. On the technical analysis front, the stock of LRS has a support level of ~$0.006 and a resistance level of ~$0.044.  Thus, considering the price movement, not so encouraging 1HFY20 financials, price movement in the past months, current trading levels, and higher cash cycle, we advise investors to avoid the stock at the current market price of $0.022 per share, down by 8.333% on 23^rd September 2020. 

Comparative Price Chart (Source: Refinitiv, Thomson Reuters)

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