Berkeley Energia Limited

BKY Details

FY20 Operational and Financial Highlights: Berkeley Energia Limited (ASX: BKY) is engaged in the exploration and development of minerals. As on 9 December 2020, the market capitalization of the company stood at ~$193.95 million. During FY20, the company witnessed a net loss after tax of $42.88 million, as compared to the profit of $34.43 million in FY19. This resulted in fall in the EPS to (9.63 cents) from 9.58 cents in FY19. However, the Group is in a healthy financial position with cash reserves of $91.76 million and net assets of $36.21 million.

FY20 Financial Highlights (Source: Company Reports)

Outlook: The Company is focusing on progressing for the approvals required to commence construction of the Salamanca mine and bring it into production. The Company will continue to maintain a consistent approach, ensuring that the project complies with all applicable laws and regulations.

Stock Recommendation: The company is expecting further tightening of market conditions as the current structural supply deficit in the global uranium market is exacerbated by COVID-19 supply disruptions. As per ASX, the stock of BKY gave a return of 66.67% in the past three months but a negative return of 19.35% in the last one month. The stock is inclined towards its 52-weeks’ high level of $1.00 and has reached its market potential. The stock of BKY has a support level of ~$0.582 and a resistance level of ~$0.737. On a TTM basis, the stock is trading at a P/BV multiple of 4.7x, higher than the industry median (Energy) of 0.7x, and thus seems overvalued. Considering the current trading levels, volatility in the returns in the past one month, and the growth outlook, we suggest investors to book profit on the stock and give a ‘Sell’ rating at the current market price of $0.680, down by 9.334% on 9 October 2020.

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

Torian Resources Limited

TNR Details

Drilling Underway at Diorite North: Torian Resources Limited (ASX: TNR) is engaged in the exploration for and development of gold resources in the Goldfields region of Western Australia. As on 9 October 2020, the market capitalization of the company stood at $19.01 million. The company has concluded the drilling on Diorite East prospect, wherein over 3 targets areas were drilled for ~1,260m. The company now plans to complete the drilling Stirling Block with a planned 5,000m drilling campaign. Dampier Gold Limited announced the results from the Credo Gold JV with Torian Resources Limited, which showed a maximum of 193ppb Au within a background of around 5ppb Au.

Half-Yearly Results: During the half-year, the company was focused on its prospective gold targets at its Mt Stirling. In the same time span, other income of the company went up to $50.2k from $151 in the pcp. The consolidated loss after income tax of the company for the half year ended 30 June 2020 stood at $1.23 million, down from $1.41 million in FY19. In the same time span, the company entered into a secured convertible loan note with Nova Minerals Limited to raise $413k.

1H20 Financial Highlights (Source: Company Reports)

Stock Recommendation: The company recently entered an option agreement to acquire 100% of four tenements, which will further strengthen the company’s exploration and development pipeline and bolster its land holdings in the highly sought-after Leanora gold fields. As per ASX, the stock of TNR gave a return of 35.42% in the past three months and a return of 52.94% in the last one month. The stock is trading higher than the average 52-weeks price level. The stock of TNR has a support level of ~$0.019 and a resistance level of ~$0.03. Considering the current market conditions, trading levels, returns in the past three months and key risks, we suggest investors to book profit and recommend a ‘Sell’ rating on the stock at the current market price of $0.026 on 9 October 2020.

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

Dropsuite Limited

DSE Details

Dropsuite Delivers Solid First Half 2020 Performance: Dropsuite Limited (ASX: DSE) provides online cloud-based backup software that enables small and medium sized enterprises worldwide to backup, recover and protect their digital assets. As on 9 October 2020, the market capitalization of the company stood at ~$48.33 million. During 1H20, the company performed well and delivered favorable operational and financial gains with an increase of 38% in revenue to $3.25 million In the same time span, EBITDA loss went down to $884k from $1.07 million in 1H19. The improvement in results were mainly due to growth in paid users and an increase in transacting partners. 

First half 2020 financial summary (Source: Company Reports)

Growth Outlook: Several persistent macro factors may reinforce the favorable outlook for the company, including growth in cybersecurity threats; increasing data privacy regulation; and the IT industry’s continuous shift to cloud-based software applications that in turn generate recurring revenue streams. The company seems well-positioned to maintain its growth trajectory.

Stock Recommendation: The performance of the company may vary given the unprecedented nature of the challenges emanating from the COVID-19 pandemic. As per ASX, the stock of DSE gave a return of 14.67% in the past six months and a return of 28.36% in the last one month. The stock has reached its market potential and retains limited potential for further growth as depicted by its current trading levels (very close to its 52-weeks’ high level of $0.09). The stock of DSE has a support level of ~$0.063 and a resistance level of ~$0.09. On a TTM basis, the stock is trading at an EV/Sales multiple of 8.2x, higher than the industry median (Technology) of 5.6x, and thus seems overvalued. Considering the current trading levels, softer market conditions and high EV/Sales multiple, we recommend a ‘Sell’ rating on the stock at the current market price of $0.083, down by 3.488% on 9 October 2020.

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

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