Stocks’ Details

Kleos Space S.A

Opening of US Engineering Office: Kleos Space S.A (ASX: KSS) is engaged in the development of the Space enabled, activity-based intelligence, data as service products. The market capitalisation of the company stood at ~$82.97 million as on 15^th December 2020. Recently, the company notified the market that it would open its principal US engineering office in Denver, Colorado and has appointed Heribert Krämer on the role of Chief Operating Officer. Previously, the company has also reached a collaboration agreement with the Fuerza Aérea de Chile (Chilean Air Force) on the analysis of geospatial information data from the Company. The company added that the Chilean Air Force would take part in testing and evaluation of Kleos geospatial RF data collected by its first cluster of satellites.

As on 30^th October 2020, the company had over 130 worldwide active B2G and B2B opportunities in its pipeline in multiple jurisdictions. This mainly includes the USA, UK, EU, Latin & South America, Middle East, South Pacific, and Australia. During Q3 FY20, the company reported net cash used in operating activities of €647K and inflow of €1.7 million from investing activities. During 1H FY20, the company recorded a loss of €2,210,162 as compared to €1,809,454 in 1HFY19.

Cash Flow (Source: Company Reports)

Outlook: The company is optimistic about its outlook, and it continues to develop a strong pipeline of future sales. This is likely to be supported by over 100 active opportunities in the entire pipeline, and to provide a solid base to its outlook.

Stock Recommendation: The company is in a decent position to deliver on its business plan on the back of successful capital raising of A$19 million. In the last three and six months, the stock of KSS has surged 87.27% and 114.58%, respectively. On a technical analysis front, the stock has a support level of ~$0.498 and a resistance level of ~$0.719. Thus, considering the steep price movement in the past months, rising business losses and absence of revenue, we suggest investors to avoid the stock at the current market price of $0.540 per share, up by 3.846% on 15^th December 2020

Miramar Resources Limited

Successful Completion of IPO: Miramar Resources Limited (ASX: M2R) is engaged in the exploration and evaluation of mining tenements. The market capitalisation of the company stood at ~$18.72 million as on 15^th December 2020. On 22^nd October, the company commenced trading on ASX following its oversubscribed Initial Public Offering (IPO), wherein, it raised $8 million at an issue price of $0.20 per share. The company would use the IPO proceeds primarily to complete the acquisitions and to execute a growth strategy for further exploration opportunities that complement its focus on precious metals. On 1^st December 2020, the company notified the market that it has commenced aircore drilling at its 80% owned Gidji JV Project, wherein, its initial focus will revolve around testing the potential for extensions to the 314,000oz “Runway” gold deposit. During FY20, the company recorded loss amounting to $189,516 and basic loss per share stood at 192.28 cents.

Key Financials (Source: Company Reports)

Outlook: Looking forward, the company is focused on creating shareholder value via acquisition, exploration and monetisation of high-quality mineral deposits.

Stock Recommendation: As on 30^th June 2020, the cash and cash equivalents of the company stood at $327,771. The 52-week low-high range for the stock stands at $0.270 - $0.560, respectively. On a technical analysis front, the stock has a support level of ~$0.33 and a resistance level of ~$0.35. Thus, considering the low market capitalisation, loss-making business and absence of revenue, we suggest investors to avoid the stock at the current market price of $0.340 per share on 15^th December 2020.

Roto-Gro International Limited

Execution of Binding Settlement Agreement: Roto-Gro International Limited (ASX: RGI) is involved in the distribution of the automated rotary hydroponic garden system. The market capitalisation of the company stood at ~$16.77 million as on 15^th December 2020. Recently, the company has introduced RotoGro Model 710 Rotational Garden System and supporting automated technology. The company added that the cultivation process for the Model 710 is fully automated and minimizing human intervention. Previously, the company has executed a binding Settlement Agreement with RavenQuest BioMed Inc., which is related to its legal proceedings at the Federal Court of Canada against RavenQuest, CL2G Consulting Synergy Solutions Management, 1052543 B.C. Ltd., and William George Robinson. For the year ended 30^th June 2020, the company reported sales revenue amounting to $678,596 as compared to $719,104 in FY19. Loss for the year amounted to $ $15,876,155 against $6,171,841in FY19.

Key Financials (Source: Company Reports)

Outlook: For FY21, the company will be focused on ongoing sales of RotoGro Garden Systems, advancing the discussions with cannabis cultivation partners and sales of additional Fertigation Systems.

Stock Recommendation: The company has successfully raised $1.53 million through a placement to enhance the launch of its Perishable Food & Vertical Farming Divisions. At the end of FY20, the cash and cash equivalents of the company stood at $345,524 as compared to $3,008,940 in FY19. In the past one and three months, the stock has moved up by 73.17% and 57.77%, respectively. The 52-week low-high range for the stock stands at $0.038 - $0.140, respectively. RGI has an EV/sales multiple of 18x as compared to the industry average of 6.8x on TTM basis. On a technical analysis front, the stock has a support level of ~$0.039 and a resistance level of ~$0.108. Thus, it seems that the stock is overvalued at the current trading level. Hence, we are of the view that most of the positive factors have been discounted and give an “Expensive” rating on the stock at the current market price of $0.071 per share, down by 7.793% on 15^th December 2020.

Comparative Price Chart (Source: Refinitiv, Thomson Reuters)

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