Berkeley Energia Limited

BKY Details

Financial Overview of 1HFY22 (Ended 31 December 2021): Berkeley Energia Limited (ASX: BKY) is a uranium mineral exploration and development firm operating the Salamanca project (~100%) in Western Spain.

• The company reports a strengthened outlook for nuclear power, given the news of China planning to develop ~150 new reactors in the next 15 years. The government of France has also announced its plans to revive the construction of nuclear reactors and develop renewable energy.
• BKY reported a net profit after tax (NPAT) of ~$3.01 million in 1HFY22 versus a net loss after tax of ~$32.57 million in 1HFY21, mainly due to positive fair value movements on financial liabilities and forex changes.

Comparative Total Assets & Total Liabilities Position; (Analysis by Kalkine Group)

Key Risks:

• Regulatory Delays: MITECO (Ministry for Ecological Transition and the Demographic Challenge) has declined BKY’s NSC II application (seeking approval for constructing the uranium concentrate plant as a radioactive facility) for the Salamanca project. BKY has lodged an administrative appeal against the ministry’s decision and faces the risk of approval for the project construction.
• Exploration Risk:The company faces the risk of discovery of new targets for exploration and resource expansion at the operating project.

Outlook: BKY is committed to develop the Salamanca mine post the grant of all permits and licences necessary for the construction and production phases. It awaits the receipt of NSC II to forge ahead with the construction of the plant.

Stock Recommendation: The stock of BKY gave a positive return of ~69.56% in the past three months and a positive return of ~20.00% in the past six months. The stock is currently trading at par to its 52-weeks’ average price level band of $0.140 - $0.640. On a TTM basis, the stock of BKY is trading at a price to book value multiple of ~2.4x lower than the industry (Energy) average of ~6.0x, thus seems undervalued. Considering the current trading levels, a robust uranium demand outlook, almost nil debt-to-equity levels, valuation on a TTM basis, and associated key business risks, we give a ‘Speculative Buy’ rating on the stock at the closing market price of $0.390, down by ~6.024%, as of 26 April 2022. Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing. 

BKY Daily Technical Chart, Data Source: REFINITIV  

Ai-Media Technologies Limited

AIM Details

1HFY22 (31 December 2021) Results: Ai-Media Technologies Limited (ASX: AIM) is a media-tech firm offering live and recorded captioning, translation, and transcription services to government, broadcast, education, etc.

• Gross profit increased from ~$8.8 million in 1HFY21 to ~$15.7 million in 1HFY22, up by ~78% Y-o-Y due to growth in SaaS revenue, the launch of new products, and increased adoption of live ASR (Automatic Captioning) globally.
• The company saw notable client wins in 1HFY22 with Sky News, TV Shopping Network (TVSN), and others moving to its ASR (Automatic Captioning) service.

Increased Revenue Share of SaaS and Devices in 1HFY22; (Analysis by Kalkine Group)

Key Risks: The company faces the risk of technological shifts, the risk of lower revenue due to the availability of free ASR tools to customers, and headwinds from the legacy ACS (Alternative Communication Services) business.

Outlook:

• The company is witnessing growth in new markets due to supportive global regulatory tailwinds for live captioning and has created a robust sales pipeline.
• Revenue guidance stands at ~$60 - $62 million with a gross margin estimate of ~53 - ~54% for FY22. A positive EBITDA is forecasted in FY22 compared to an EBITDA Loss of ~$8.7 million in FY21.

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

Source: Analysis by Kalkine Group

*% Premium/(Discount) is based on our assessment of the company’s NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

Stock Recommendation: The stock of AIM gave a negative return of ~30.15% in the past three months and a negative return of ~59.63% in the past six months. The stock is currently trading at par to its 52-weeks low level of ~$0.440. The stock has been valued using the EV/Sales-multiple-based illustrative relative valuation method and arrived at a target price of low double-digit upside (in % terms). The company might trade at some discount than its peers’ mean EV/Sales multiple, considering the continued negative net margin, negative ROE, and increase in the sales and marketing expenses in 1HFY22. For this purpose of valuation, a few peers like News Corp (ASX: NWS), Southern Cross Media Group Ltd (ASX: SXL), Enero Group Ltd (ASX: EGG), and others have been considered. Considering the current trading levels, growth in top line, an increasing sales pipeline and long-term tailwinds emerging in the broadcast and enterprise sector, improved earnings forecast for FY22 vs FY21, an indicative upside in valuation, and associated key business risks, we give a ‘Speculative Buy’ rating on the stock at the closing market price of $0.440, down by ~5.376%, as of 26 April 2022. Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

AIM Daily Technical Chart, Data Source: REFINITIV 

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

Note 2: Investment decision 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 Valuation has been achieved and subject to the factors discussed above.

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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