Thorney Opportunities Limited

TOP Details

H1FY22 Financial Update: Thorney Opportunities Limited (ASX: TOP) is majorly involved in investments in public and private securities covering a variety of sectors, for instance, media, automotive, energy, and pharmaceutical.

• Improved Shareholders’ Returns: TOP rendered 4.7% total shareholder return in H1FY22, inclusive of final dividend paid in September 2021. Net Tangible Assets (NTA) increased by 3.1%.
• Bottom-Line Standing: Net Profit after Tax (NPAT) stood at $6.9 million, underpinned by continued diversity in the investment portfolio with contributions from financial services, media, infrastructure, and resource services.
• Expanding Asset Base: TOP clocked a 0.4% annual growth in NTA since inception. The uptick was primarily driven by positive results from continued transformation and increase in carrying value of Australia Community Median investment.

H1FY22 Financial Snapshot; Analysis by Kalkine Group

Key Risks and Challenges

Considering the high volatility in global equity markets, the investments stand a high risk of short-term dilution in shareholders’ return. Considering investments in private equity space, the liquidity potential for TOP remains low.

Outlook

TOP stood optimistic over Money3 Corporation (ASX: MNY), since the company is focusing on pursuing the loan book growth to $1 billion. TOP remains bullish on the infrastructure and resource services portfolio and plans to eliminate the share price discount to NTA and engage in on-market buyback.

Stock Recommendation: The stock of TOP gave a negative return of ~9.01% in the past year. The stock is currently trading lower than the 52-weeks’ average price level band of $0.500 - $0.615. In addition, the stock is trading at a price-to-book value multiple of 0.7x relative to the industry average (Investment Banking & Investment Services) of 1.9x on a TTM basis; thus, it seems that the stock is undervalued at the current trading levels. Given the valuation on TTM basis, decent liquidity position, favourable shareholders’ returns, current trading levels, and critical risks associated with the business, we give a “Speculative Buy” recommendation on the stock at the closing market price of $0.505, down by ~0.980%, as of 9 May 2022.

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.

TOP Daily Technical Chart, Data Source: REFINITIV

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 for upside potential, risks, holding duration, and previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and is 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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