Company Overview: The Star Entertainment Group Limited (ASX: SGR) operates three hotel and casino complexes in Australia: The Star Sydney, The Star Gold Coast, and Treasury Casino and Hotel in Brisbane. Iluka Resources Limited (ASX: ILU) engages in the exploration, project development, mining, processing, marketing, and rehabilitation of mineral sands in Australia, China, rest of Asia, Europe, the Americas, and internationally. This Report covers the Price Action, Technical Indicators Analysis along with the Support Levels, Resistance Levels, and Recommendations on these stocks.

Recent Updates:

• Financial Summary: On 26 September 2024, SGR reported FY24 results, achieving revenue of AUD 1,678 million and an EBITDA of AUD 175 million, in line with prior earnings guidance. Despite facing a statutory net loss of AUD 1,685 million, primarily due to a non-cash impairment charge of AUD 1.44 billion linked to regulatory changes and trading conditions, the Company is actively addressing these challenges. The early months of FY25 witnessed that the Company took strategic steps to enhance performance, with ongoing transformation initiatives aimed at improving operations. While trading performance declined in the second half of FY24, the Company is committed to driving efficiencies and strengthening its risk and control functions, positioning itself for recovery and future growth.
• Liquidity: As of 31 August 2024, The Star had available cash of AUD 130 million; however, it highlighted near-term liquidity requirements to support operations, ongoing remediation and transformation activities, equity contributions to the Destination Brisbane Consortium Joint Venture, and costs related to regulatory matters. On 25 September 2024, the company announced a commitment letter from corporate lenders for a new debt facility of up to AUD 200 million, pending final documentation and conditions. The Star is also exploring additional capital sources, including subordinated debt, and has identified various initiatives to improve business performance and enhance its liquidity position.
• Outlook:
• In response to the evolving competitive landscape, The Star Entertainment Group is actively refocusing its strategy to enhance revenue generation. Management has identified several initiatives aimed at improving the customer experience, which is expected to drive market share and revenue growth. Key initiatives include enhancing on-site offerings by optimizing vacant space, improving accessibility, and forging partnerships with leading entertainment and food and beverage providers. The company aims to better utilize its facilities and improve the overall ambience to attract more customers.
• Moreover, SGR will prioritize acquiring business events and residential conferences to drive longer stays and boost accommodation revenue. With these strategic initiatives, management is optimistic about enhancing revenue streams and improving overall financial performance in the face of changing market dynamics.

 SGR’s Technical Analysis:

On the daily chart, SGR's stock price is forming a downtrend characterized by lower lows and lower highs, indicating a negative bias. In contrast, trading volume has surged recently, hinting that more buyers are engaging in bottom fishing, potentially signalling a minor rally. Additionally, the RSI (14-period) is trading deep in its oversold region, providing further support for the mentioned recommendation. Prices are trading between its previous peak and trough, which may potentially function as resistance and support levels for the stock, respectively. Significant support for the stock is positioned at AUD 0.220, while key resistance is placed at AUD 0.285.

Daily Technical Chart – SGR

Considering the stock’s current trading volume surging, and momentum oscillator analysis, a “Speculative Buy” recommendation is given on the stock. The stock was analysed as per the closing price of AUD 0.260 per share as on 03 October 2024, down by 5.45%. Star Entertainment Group (ASX: SGR) was last covered in a report dated ’20 May 2024’.

Recent Updates:

Financial and Operational Summary:

• On 21 August 2024, ILU reported H1 FY24 results (for the period ended 30 June 2024), with mineral sands revenue of AUD 606 million, down from AUD 712 million in H1 FY23. The mineral sands EBITDA margin was 42% in H1 FY24, compared to 50% in the previous year, while net profit after tax (NPAT) decreased to AUD 134 million in H1 FY24 from AUD 204 million in H1 FY23. The company generated operating cash flow of AUD 189 million and had net cash of AUD 305 million, excluding non-recourse debt, down from AUD 371 million at the end of December 2023.
• Operationally, Iluka's Total Recordable Injury Frequency Rate increased to 3.0 in FY24 (FY23: 2.4), although the Serious Potential Injury Frequency Rate improved to 2.5 (FY23: 3.6). The company successfully navigated a challenging macroeconomic environment with a focus on market discipline and value. The pigment industry is experiencing structural changes that may enhance financial stability through economic cycles. The Balranald project is on track for commissioning in the second half of 2025, while the Eneabba project is progressing well alongside operational readiness plans. In addition, the Board declared a 2024 interim dividend of 4 cents per share, fully franked, reflecting Iluka's commitment to maintaining shareholder returns amidst industry challenges.

Risk and Outlook:

ILU foresees a challenging outlook influenced by three key factors. First, global macroeconomic uncertainty is affecting customer behavior in the titanium and zircon markets, although zircon prices remained stable and long-term contracts for synthetic rutile provide revenue certainty. Second, the company is exercising operational discipline by managing inventory to reflect product value, which positions it for a potential restart of its synthetic rutile asset, SR1. Optimism is growing for the pigment industry recovery in 2025. Lastly, Iluka is investing in key projects, with Balranald on track for commissioning in H2 FY25 and Eneabba's capital estimate confirmed at AUD 1.7 to 1.8 billion. Updates on the rare earths business are expected in H2 FY24.

ILU’s Technical Analysis:

On the daily chart, ILU's stock price recently broke above a descending wedge pattern during a downtrend, signalling a positive bias in the near term. In contrast, the RSI (14-period) is reversing after approaching its oversold region, anticipating for a minor correction. Prices are trading above both the 21-period and 50-day SMAs, which may potentially function as dynamic support levels for the stock; in contrast, the stock’s most recent high might act as a resistance level. Critical support for the stock is positioned at AUD 6.01, while key resistance is placed at AUD 7.36.

Daily Technical Chart – ILU

Individuals can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest, taking into consideration the risk-reward scenario.

Considering the stock’s current price levels surpassing a descending wedge pattern during a downtrend, and momentum oscillator analysis, a “Watch” recommendation is given on the stock. The stock was analysed as per the closing price of AUD 6.68 per share as on 03 October 2024, down by 2.05%. Iluka Resources Limited (ASX: ILU) was last covered in a report dated ’08 May 2024’.

Note 1: Past performance is neither an Indicator nor a guarantee of future performance.

Note 2: Investment decision should be made depending on an individual’s appetite for upside potential, risks, and any previous holdings. This recommendation is purely based on technical analysis, and fundamental analysis has not been considered in this report.

Note 3: Related Risks: This report may be looked at from high-risk perspective and recommendations are provided are for a short duration. Recommendations provided in this report are solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc.

The reference date for all price data, currency, technical indicators, support, and resistance levels is October 03, 2024. The reference data in this report has been partly sourced from REFINITIV.

Technical Indicators Defined:

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

The Green colour line reflects the 21-period moving average. SMA helps to identify existing price trends. If the prices are trading above the 21-period, prices are currently in a bullish trend (Vice – Versa).

The Blue colour line reflects the 50-period moving average. SMA helps to identify existing price trends. If the prices are trading above the 50-period, prices are currently in a bullish trend (Vice – Versa).

The Orange/ Yellow colour line represents the Trendline.

The Purple colour line in the chart’s lower segment reflects the Relative Strength Index (14-Period), which indicates price momentum and signals momentum in trend. A reading of 70 or above suggests overbought status, while a reading of 30 or below suggests an oversold status.