Bod Australia Limited

BDA Details

Record Medicinal Cannabis Purchase Orders Achieved in Q1: Bod Australia Limited (ASX: BDA) distributes and markets two premium brands and products for the skincare, beauty, and health industries. As on 28 October 2020, the market capitalization of the company stood at ~$47.05 million. During 1QFY21, the company reported record medicinal cannabis growth for a total of 2,630 MediCabilis™ units, reflecting a growth of 165% on the previous quarter. This was mainly due to continued product uptake and strong brand recognition in Australia.

Record Purchase Orders (Source: Company Reports)

FY20 Financial Highlights: During FY20, revenue and other income of the company went up to $6.05 million from $1.34 million in FY19. In the same time span, loss after income tax amounted to $4.81 million, down from $7.62 million in FY19. The company reported a healthy balance sheet with a cash balance of $6.38 million, up from $2.84 million in FY19. The reduction in cash burn has been achieved through stringent controls of all operating expenditure, without compromising the investments in innovation, R&D and key recruitments.

Outlook: The Company anticipates that it will achieve continued sales growth during Q2, with an increase in operations in the UK. The company also anticipates growth in Australia, with MediCabilis™ and cannabis becoming a broadly standard treatment for several debilitating conditions such as chronic pain, insomnia, Post Traumatic Stress, and anxiety.

Stock Recommendation: During the year, the company unlocked several value accretive opportunities and seems well positioned to continue its growth trajectory. However, the stock of BDA is trading very close to its 52-weeks’ high level of $0.570 and seems to have reached its market potential. The stock of BDA gave a return of 103.84% in the past three months and a return of 34.17% in the last one month. On a technical front, the stock of BDA has a support level of ~$0.461 and a resistance level of ~$0.563. On a TTM basis, the stock of BDA is trading at an EV/Sales multiple of 6.8x, higher than the industry average (Food &Drug Retailing) of 1.2x, and thus seems overvalued. Considering the current trading levels, softer market conditions, and TTM valuation we suggest investors to book profits and give a ‘Sell’ rating on the stock at the current market price of $0.530, up by 2.912% on 28 October 2020.

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

Minotaur Exploration Ltd

MEP Details

Natural Nanotech JV advances Halloysite Uses: Minotaur Exploration Ltd (ASX: MEP) is engaged in securing the new tenements with potential for mineralization. As on 28 October 2020, the market capitalization of the company stood at ~$36.01 million. The company’s 50% owned joint venture, Natural Nanotech Pty Ltd, is aiming to develop solutions for a range of high-profile environmental issues using nano-porous materials synthesized from natural halloysite-kaolin mixtures and optimized for applications. The company has also announced that Halloysite based nanocarbon materials have been produced from Great White halloysite-kaolin and successfully activated with functional additives.

Quarterly Highlights (For the Quarter Ended 30 September 2020): During the quarter ended 30 September 2020, the company witnessed a strongly supported share purchase plan wherein it raised $6 million and reported a cash balance of $9.6 million. During the quarter, the company is nearing to finalize due diligence for the proposed purchase of the Pyramid project south of Townsville. In the same time span, it used a cash of $221k on operating activities.

Cash Flow from Operating Activities (Source: Company Reports)

Stock Recommendation: The company’s plans for participation in the Great White Kaolin JV and is likely to maintain 25% contributing share into production, presently projected to be in mid-2022. As per ASX, the stock of MEP is trading very close to its 52-weeks’ high level of $0.089, and thus retains limited potential for further growth. The stock of MEP gave a return of 97.67% in the past 3 months and a return of 7.59% in the last one month. On a technical front, the stock of MEP has a support level of ~$0.069 and a resistance level of ~$0.089. On a TTM basis, the stock of MEP is trading at a price to book value multiple of 5.1x, higher than the industry median (Basic Materials) of 2.6x. Considering the current trading levels, valuation on TTM basis, and uncertain and softer market conditions, we give a ‘Sell’ rating on the stock at the current market price of $0.085, up by 16.438% on 28 October 2020, owing to its recent announcement of Natural Nanotech JV advances Halloysite.

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

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