Talga Resources Ltd

TLG Details

Appointment of CEO: Talga Resources Ltd (ASX: TLG) is engaged in the development of anode project and mineral exploration in Sweden. The market capitalisation of the company stood at ~$245.63 Mn as on 22^nd October 2020. Recently, the company has appointed Martin Phillips as the Chief Executive Officer of its European operations after achieving progress in building an ultra-low emission anode supply chain in Europe. In another update, the company stated that the technical and commercial development of Talnode®-Si is proceeding at its facilities in Europe. The company added that it has expanded Niska Scoping Study for the production of the graphene-graphite precursors in order to assist the advancing product and market development of its silicon anode.

FY20 Results Highlights: During FY20, the company inked an agreement with leading lithium-ion batteries manufacturers “Farasis”, wherein TLG would supply Talnode® products for evaluation in Farasis batteries as well as estimation of business development opportunities. For the year ended 30^th June 2020, the company reported revenue from ordinary activities of $9,349 as compared to $8,542 in FY19. Net loss for the year amounted to $13,416,292 against $12,935,079 in FY19.

Key Financials (Source: Company Reports)

Capital Raising: Previously, the company has raised $10.0 million via placement of 20,000,000 new fully paid ordinary shares at an issue price of $0.50 per share to institutional, sophisticated, and professional investors. The company intends to utilise the proceeds mainly for accelerating manufacturing of Talnode®-C customer samples for satisfying larger automotive OEM qualification processes underway and for general working capital.

Outlook: The company seems to be well-positioned to accomplish its objective of developing a European source of Li-ion battery materials as well as graphene additives. For FY21, the company is planning to finish the Niska Scoping Study. The company has scheduled to conduct its 2020 Annual General Meeting on 12^th November 2020.

Stock Recommendation: As on 30^th June 2020, the cash balance of the company stood at $5.1 million as compared to $7.7 million as on 30^th June 2019. In the past three and six months, the stock has moved up by 74.55% and 242.85%, respectively. As a result, the stock of TLG is inclined towards its 52-week high level of $0.975. On the technical analysis front, the stock price of TLG has a support level of ~$0.745 and a resistance level of ~$0.976. Thus, considering the recent exploration and business activities, we are of the view that most of the positive factors have been discounted at current trading levels. Hence, we give an “Expensive” rating on the stock at the current market price of $0.965 per share, up by 3.763% on 22^nd October 2020.

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

Strickland Metals Limited

STK Details

Restart of Exploration Activities: Strickland Metals Limited (ASX: STK) is engaged in the exploration and mining of gold with a market capitalisation of ~$52.38 Mn as on 22^nd October 2020. Recently, the company notified about its near-term plans for Doolgunna exploration project, wherein it stated that the exploration activity has restarted on the project following the completion of Heritage surveys. The company’s objective behind drilling at the project is to achieve base metal prospect which showcases geological characteristics. For the year ended 30^th June 2020, the company reported a loss amounting to $693,018 as compared to $1,835,675 in FY19. The company incurred $2,053,885 for the exploration and acquisition of tenements. During FY20, the company reported net cash used in operating activities of $469,623 as compared to $328,184 in FY19. The company has raised around $600,000 before costs through a placement to professional and sophisticated investors along with a share purchase plan of $1.4 million.

Key Financials (Source: Company Reports)

Outlook: With respect to Horse Well Gold Project Joint Venture, the company is focused on reviewing geological and resource models to assess opportunities to grow mineral resources.

Stock Recommendation: The company closed FY20 with cash and at call deposits of $529,167 against $446,180 in FY19. The stock of STK has experienced a sharp rise of 108.33% and 257.14% in the last one and three months, respectively. The 52-week low-high range for the stock stands at $0.010 - $0.135, respectively. In addition, the stock is trading at a price to book value multiple of 7.3x as compared to the industry median (Metals & Mining) of 2.8x on TTM basis. On the technical analysis front, the stock price of STK has a support level of ~$0.053 and a resistance level of ~$0.135. Therefore, in light of loss-making business, low market capitalisation, and negative operating cashflow, we suggest investors to avoid the stock at the current market price of $0.130 per share, up by 4% on 22^nd October 2020.

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

engage:BDR Limited

EN1 Details

Decent Growth in Top-line: engage:BDR Limited (ASX: EN1) is an internet-based marketplace platform and associated technology solution provider with a market capitalisation of ~$12.06 million as on 22^nd October 2020. Recently, the company notified about its ZCS convertible notes financing facility, wherein it stated that the note holder, Alto has showcased his confirmation to accept cash payment for over 50% of the total balance and the company has paid $345K, which include a premium of 3%. In addition, the company would continue its negotiations for the pay-off of the remaining notes balance. For the month of September 2020, the company reported a rise of 20% in revenue to $1.43 million over August 2020. The company believes that the growth in revenue proved as a recovery indicator for its business.

Revenue Growth (Source: Company Reports)

1HFY20 Highlights: During the period, the company’s revenue grew 31.5% to $8.1 million. Programmatic auctions per day stood at 55 Bn, up 275% to year over year. EBITDA operating profit for the period amounted to $211K.

Outlook: For FY20, the company is focused on higher revenue-generating opportunities. Going forward, the company is committed to achieve specific milestones within certain timeframes, along with the goal of accomplishing profitability.

Stock Recommendation: At the end of 1HFY20, the net asset of the company increased to $4.5 million as compared to $3.9 million at the end of FY19. EN1 closed the half-year with a cash balance of $1.7 million. In the span of the last six months, the stock has corrected 41.66% and is inclined towards its 52-week low levels of $0.005, offering a decent opportunity for accumulation. EN1 has an EV/Sales multiple of 0.7x as compared to the industry median (Software & IT Services) of 6.9x on TTM basis. In addition, the stock is trading at a price to book value multiple of 2.7x against the industry median (Software & IT Services) of 5.2x on TTM basis. Thus, it seems that the stock is undervalued at current trading levels. On the technical analysis front, the stock price of EN1 has a support level of ~$0.004 and a resistance level of ~$0.054. Therefore, considering the decent growth in top-line, focus on revenue generating-opportunities, current trading levels, and key risks, we give a “Speculative Buy” recommendation on the stock at the current market price of $0.006 per share, down 14.286% on 22^nd October 2020. 

EN1 Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

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