Stocks’ Details

Piedmont Lithium Ltd

Agreement with Sayona Mining Limited: Piedmont Lithium Ltd (ASX: PLL) is involved in the exploration and development of resource projects. The market capitalisation of the company stood at ~$625.85 million as on 15^th January 2021. Recently, the company has appointed Ms. Malissa Gordon, Mr. Jim Nottingham, Mr. John Pratt Ray, and Mr. Brian Risinger as senior members of the company.  On 11^th January 2021, the company reached an agreement with Sayona Mining Limited to create a strategic partnership via the acquisition of 19.9% equity interest and 25% in Sayona Quebec. As a result, PLL would make an investment of US$12 million in Sayona. In addition, PLL has entered binding supply agreement for the purchase of a minimum 50% stake in planned spodumene concentrate production on Sayona Quebec. During September 2020 quarter, the company inked an agreement with Tesla, Inc for the supply of spodumene concentrate. The net cash outflow from operating and investing activities of US$1.16 million and US$3.4 million, respectively.

Cash Flows from Operating Activities (Source: Company Reports)

Outlook: The company’s objective revolves around creating long-term shareholder value through the discovery, development, and acquisition of technically and economically viable mineral deposits.

Stock Recommendation: The company closed September 2020 quarter with cash and cash equivalents of US$21.42 million. The stock of PLL has surged 477.77% and 575.21% in the last six and nine months, respectively. As a result, the stock is trading towards its 52-weeks’ high level of $0.660. In addition, the stock is trading at a price to book value multiple of 28.5x against the industry median (Basic Materials) of 3.0x on TTM basis. Thus, it seems that the stock is overvalued at the current trading level. On a technical analysis front, the stock has a support level of ~$0.3278 and a resistance level of ~$0.6048. Therefore, considering the steep price movement in the past few months, current trading level and valuation on TTM basis, we are of the view that most of the positive factors have been discounted at the current trading level and give an “Expensive” rating on the stock at the current market price of $0.540 per share, up by 20% on 15^th January 2021. We further suggest investors to wait for a better entry-level.

Lion One Metals Limited

A Look at Q1 FY21: Lion One Metals Limited (ASX: LLO) is engaged in the exploration of minerals. The market capitalisation of the company stood at ~$268.01 million as on 15^th January 2021. During the quarter ended 30^th September 2020 (Q1 FY21), the company continued accelerated exploration program at Tuvatu Gold Project in order to confirm the potential of this large mineralized alkaline system to host multi-millions gold ounces. During the quarter, the company recorded loss amounting to $753,761 as compared to $658,532 in Q1 FY20.  

During FY20, the company emerged as a fully equipped gold exploration company with four active surface drilling rigs and a fully operational, quick-response metallurgical and geochemical laboratory. The company closed FY20 with a decent working capital position of CAD $63 million, which was secured via a private placement in December 2019 ($11m raised at $0.92), August 2020 ($39m raised at $1.70 and $2.05), with an additional $17 million secured through the full exercise of the $1.20 December 2020 warrants.

Key Financials (Source: Company Reports)

Outlook: Looking forward, the company is focused on the progress of premium quality gold assets in Fiji which has the world-class attributes of high grades, scope, district scale, and depth potential.

Stock Recommendation: As on 30^th September 2020, the cash and cash equivalents of the company stood at $42.85 million against $10.25 million as on 30^th June 2020. In the span of the past few years, the company has recorded negative ROE and ROIC. The 52-week low-high range for the stock stands at $0.850 - $6.350, respectively.  On a technical analysis front, the stock has a support level of ~$1.357 and a resistance level of ~$2.546. Thus, in light of the loss-making business, market volatility, and absence of revenue, we advise the investors to avoid the stock at the current market price of $1.700 per share, down by 1.450 on 15^th January 2021.

Netlinkz Limited

Decent Growth in Cash Receipts: Netlinkz Limited (ASX: NET) is in the delivery of virtualized network services through a Virtual Services Platform. The market capitalisation of the company stood at ~$124.40 million as on 15^th January 2021. Recently, the company announced that it has redeemed 4,515,429 of the September 2020 Convertible Notes with a face value of A$4,515,429, which was financed through the funds received under the recent placement undertaken by NET. During the quarter ended 30^th September 2020, the company recorded receipts from customers of A$5.8 million, reflecting a rise of 89% over June 2020 quarter. During the quarter, the company signed significant contracts with a value of $1.5 million.

Key Metrics (Source: Company Reports)

Outlook: Looking forward, the company has shifted its focus from developing a market-leading product to now driving sales and distribution. In addition, the company’s growth strategy revolves around increasing adoption in existing markets and establishing further partnerships in new regions to sell the VSN.

Stock Recommendation: As on 30^th September 2020, cash and cash equivalents of the company stood at $2.4 million. In the last one and three months, the stock of NET has corrected by 30.28% and 26.11%, respectively. As a result, the stock is trading towards its 52-week low level of $0.035, offering a decent opportunity for accumulation. On a technical analysis front, the stock has a support level of ~$0.034 and a resistance level of ~$0.099. Therefore, considering the growth in cash receipts, signing of contracts, decent outlook, current trading level and key risks associated with the business, we give a “Speculative Buy” recommendation the stock at the current market price of $0.049 per share, down by 2.001% on 15^th January 2021. 

Uscom Limited

Decent Growth in Topline and Bottom Line: Uscom Limited (ASX: UCM) is engaged in the development and manufacturing of premium cardiovascular devices. The market capitalisation of the company stood at ~$24.60 million as on 15^th January 2021. Recently, the company reported trading performance for the first 5 months of FY21 against 1H FY20. During the period, the company recorded sales revenue of $2.01 million, reflecting a rise of 196% from $0.68 million in 1H FY20. In addition, total revenue for the period witnessed a rise of 135% to $2.26 million. Profit for the 5 months amounted to $0.18 million, increased from a loss of $1.5 million in 1H FY21.

Key Metrics (Source: Company Reports)

Outlook: The company expects sales of USCOM 1A to benefit as health spending worldwide is focused on refurbishing and building new high-grade critical care centres for the treatment of infectious diseases.

Stock Recommendation: Operating cash inflow for the first five months of FY21 stood at $0.21 million, which was supported by the capital raising of $1.05 million in November 2020. The stock of UCM has corrected by 8.57% and 21.95% in the past three and six months, respectively. As a result, the stock is trading towards its 52-week low level of $0.110, offering a decent opportunity for accumulation. On a TTM basis, UCM has an EV/Sales multiple of 6.1x, which is lower than the industry median (Healthcare Equipment & Supplies) of 13.0x. Thus, it can be said that the stock is undervalued at the current trading level. On a technical analysis front, the stock has a support level of ~$0.14 and a resistance level of ~$0.28. Therefore, considering the growth in topline and bottom line, rising cash inflow, decent long-term outlook, current trading level and key risks associated with the business, we give a “Speculative Buy” recommendation the stock at the current market price of $0.160 per share with no change on 15^th January 2021.

Comparative Price Chart (Source: Refinitiv, Thomson Reuters)

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