Mali Lithium Limited

MLL Details

Results of Definitive Feasibility Study: Mali Lithium Limited (ASX: MLL) is involved in the development and exploration of minerals with a market capitalisation of ~$65.75 million as on 20^th October 2020. Recently, the company notified the market about the results of Definitive Feasibility Study (DFS) at Goulamina Lithium Project. Per the study, Goulamina comes under highest quality lithium assets in the world, which is poised to deliver large scale, cost effective and long-life open pit project. The company added that the project is delivering outstanding returns with a pre-tax NPV of A$1.7 billion. During 1H FY20, the company reported a net loss after tax amounting to $1,072,595 as compared to $1,990,962 in 1H FY19. During the half-year, MLL received COVID-19 stimulus package of $50,000 from the Federal Government. In addition, the company is also likely to receive further $50,000 in four equal payments.

Financial Summary (Source: Company Reports)

Outlook: The company’s long-term growth prospects revolve around underground mining possibilities and regional acquisitions and consolidation. Over the medium term, the company is planning to extend drilling at Morila and satellites. The company has scheduled to conduct its General Meeting on 23rd October 2020.

Stock Recommendation: As on 20^th September 2020, the cash balance of the company stood at A$7.0 million. In the past six months, the stock of MLL experienced steep upside movement of 343.18%. In addition, the stock is trading towards its 52-week high level of $0.220. On a technical front, the stock of MLL has a support level of ~$0.116 and a resistance level of ~$0.222. We have considered 14-day RSI (Relative Strength Index), and default values have been used. After careful consideration, it was observed that the stock is currently at overbought zone; hence we expect a correction in the stock price in the coming times. Hence, considering the current trading levels and movement in stock within the past period, we advise investors to book profit and give “Sell” recommendation on the stock at the current market price of $0.195 per share, up by 8.333%, owing to the release of DFS results.

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

Shriro Holdings Limited

SHM Details

Decline in Topline: Shriro Holdings Limited (ASX: SHM) is engaged in the marketing and distribution of kitchen appliances and consumer goods. The market capitalisation of the company stood at $78.44 Mn as on 20^th October 2020. During 1H FY20, the company recorded sales revenue of $78.6 million, reflecting a fall of 1.8% on a year over year basis. However, NPAT for the period amounted to $4.7 million, reflecting a rise of 74.1% over pcp. This was mainly supported by a fall in employee benefits expenses, which stood at $10.18 million as compared to $13.36 million in 1HFY19. Further, SHM’s diversified product, distribution channels and geographic mix aided the company to come out stronger from the impact of COVID-19 related retail shutdown.

Key Financials (Source: Company Reports)

Impact on Future Performance: As of now, the company is not in the capacity to forecast full-year results, due to uncertain economic conditions. In addition, the company is expecting its trading performance for the upcoming months to be impacted by unannounced government directives and initiatives.

Stock Recommendation: The company closed the half-year with a cash balance of $19.7 million and nil borrowings. The stock of SHM has moved up by 59.80% and 77.10% in the past three and six months, respectively. As a result, the stock is inclined towards its 52-week high level of $0.870. On a technical front, the stock of SHM has a support level of ~$0.673 and a resistance level of ~$0.872. We have considered 14-day RSI (Relative Strength Index), and default values have been used. After careful consideration, it was observed that the stock is currently at overbought zone; hence we expect a correction in the stock price in the coming times. The stock of SHM is trading at a price to book value multiple of 1.5x as compared to the industry median (Household goods) of 1.2x on TTM basis. Therefore, considering the movement in stock within the past few months, current trading level, RSI levels and uncertain outlook, we advised investors to book profit and give “Sell” recommendation on the stock at the current market price of $0.815 per share, down by 1.213% on 20^th October 2020.

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

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