Altech Chemicals Limited

ATC Details

Latest Update: Altech Chemicals Limited (ASX: ATC) is engaged in manufacturing and exploring high purity alumina (HPA) to develop a processing plant in Malaysia. Recently, ATC issued ~202,800 ordinary shares at ~$0.08 per share due to the exercise of ~202,800 listed options under the ticker ASX: ATCOB.

Financial Highlights of 1HFY22 (ended 31 December 2021):

• ATC reported ~$4.29 million net cash outflows from operating and investing activities during 1HFY22 versus ~$8.67 million outflows in 1HFY21.
• The company held ~$11.68 million in net current assets as of 31 December 2021 compared to ~$6.28 million as of 30 June 2021.

 The Trend of Net Income/Loss after Tax; (Analysis by Kalkine Group)

Key Risks: The company risks the development and production from the HPA project, huge capital investment in plants construction, supply chain disruptions, and forex rate changes. 

Outlook: The company is undertaking activities to recommence the construction of the HPA project in Malaysia. It plans to raise ~US$144 million from the green bond issue and simultaneously advances an additional equity portion for the project via the US-based bank of DelMorgan & Co. to manage the process for potential North American investors.

Stock Recommendation: The stock of ATC gave a negative return of ~17.14% in the past three months and a positive return of ~27.94% in the past six months. The stock is currently trading lower than the 52-weeks’ average price level band of $0.041 - $0.150. On a TTM basis, the stock of ATC is trading at a price to book value multiple of ~1.4x, lower than the industry (Metals & Mining) median of ~2.3x, thus seems undervalued. Considering the current trading levels, progress on the development and financing of the HPA project, nil debt levels, improved liquidity, valuation on a TTM basis, and associated key business risks, we give a ‘Speculative Buy’ rating on the stock at the closing market price of $0.087, as of 29 March 2022. Markets are currently trading in a highly volatile zone due to specific macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.

ATC Daily Technical Chart, Data Source: REFINITIV 

Metarock Group Limited

MYE Details

Latest Update: Metarock Group Limited (ASX: MYE) is a diversified underground mining services firm. Recently, MYE’s subsidiary Mastermyne Pty Limited reported an accident of an employee on 25 March 2022 at the Moranbah North underground mine, due to which the mining operations have been suspended currently.

1HFY22 (ended 31 December 2021) Results in Overview:

• MYE has ~$1.9 billion of a current order book out of which ~$245 million is to be delivered in 2HFY22. It reports tendering pipeline of over ~$2.0 billion comprising coal contracting mine operations, and hard rock contracting.
• MYE foresees a positive outlook concerning commodity prices and expects that the mining services contractors will stand to gain from robust resource sector tailwinds. MYE believes to be amidst an early commodity cycle and expects to leverage from the robust results of the pre-production exposed mining services and current development activity.

Increase in Cash Receipts & Net Operating Cashflows; (Analysis by Kalkine Group)

Key Risks: The company faces the exploration risk, changes in commodity prices and production, climate fluctuations, and labour supply disruptions.

FY22 Guidance & Plans:

Outlook Highlight; (Analysis by Kalkine Group)

Valuation Methodology: EV/Sales Multiple Based Relative Valuation (Illustrative)

Source: Analysis by Kalkine Group

*% Premium/(Discount) is based on our assessment of the company’s NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

Stock Recommendation: The stock of MYE gave a negative return of ~13.57% in the past three months and a negative return of ~34.59% in the past six months. The stock is currently trading lower than the 52-weeks’ average price level band of $0.570 - $1.260. The stock has been valued using the Enterprise Value to Sales based illustrative relative valuation method and arrived at a target price of low double-digit upside (in % terms). The company might trade at a slight discount than its peers’ median EV/Sales multiple, considering the impact of the Crinum mine and lowered revenue guidance for FY22. For this purpose of valuation, a few peers like Mitchell Services Ltd (ASX: MSV), MACA Ltd (ASX: MLD), Macmahon Holdings Ltd (ASX: MAH), and others have been considered. Considering the current trading levels, increase in top line, a robust order book and commodity outlook, an indicative upside in valuation, decent long-term outlook, and associated key business risks, we give a ‘Speculative Buy’ rating on the stock at the closing market price of $0.605, up by ~0.833%, as of 29 March 2022. Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

MYE Daily Technical Chart, Data Source: REFINITIV 

Tempus Resources Limited

TMR Details

New Agreement with SXFN: Tempus Resources Limited (ASX: TMR) is a gold exploration company with the Blackdome-Elizabeth project in British Columbia (BC) and the Zamora project in Ecuador. Recently, TMR has entered an agreement with Stswecem'c Xgat’tem First Nation (SXFN) for exploration at the Blackdome gold mine project in BC.

Operational Highlights of 1HFY22 (Ended 31 December 2021):

• Elizabeth Gold Project Update: TMR has reported significant bonanza grade intersections from the drilling at the SW Vein South and the Blue Vein at the project. It prioritses the Phase 1 exploration drilling program at the project to extend further, delineate the Southwest (SW) Vein and discover other veins hosting gold mineralization.
• The Zamora Projects: The Valle del Tigre and the Rio Zarza projects are in the early exploration stages. A Phase 2 grid sampling program is being undertaken on the northern portion of the Valle del Tigre project license area. Three holes have been identified to test the target at the Rio Zarra project.

The Debt & Liquidity Position; (Analysis by Kalkine Group)

Key Risks: The company faces labour scarcity due to the COVID-19 crisis, risks of discovery of new targets for resource expansion and seamless funding for continuous exploration. 

Outlook: TMR targets to expand exploration at the Blue Vein and other vein targets at the Elizabeth gold project in 2022 for resource expansion. The project has high-grade gold exploration potential and provide options for future fast-track production. 

Stock Recommendation: The stock of TMR gave a negative return of ~17.27% in the past three months and a negative return of ~50.81% in the past six months. The stock is currently trading lower than the 52-weeks’ average price level band of $0.080 - $0.295. Considering the low trading levels, drilling expansion program at the Blue Vein and other targeted veins in 2022 and beyond, low debt levels, plans for resource estimation, technical levels mentioned below, and associated key business risks, we give a ‘Speculative Buy’ rating on the stock at the closing market price of $0.091, up by ~1.111%, as of 29 March 2022. Markets are currently trading in a highly volatile zone due to specific macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.

Technical Note: On the daily chart, TMR prices are hovering around the horizontal trend line support level and taking the support of the trendline. Moreover, the momentum oscillator RSI (14-period) is trading at ~45.97 level, reversing from the lower level. However, the prices are trading below the trend-following indicator 21-period SMA, which may act as a resistance level. An important support level for the stock, is placed at AUD 0.082 while the key resistance level is placed at AUD 0.108.

TMR Daily Technical Chart, Data Source: REFINITIV 

Note 1: The reference data in this report has been partly sourced from REFINITIV.

Note 2: Investment decision should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and 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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