Latest Research

Paragon Care (PGC) - Strong Vital Signs

Paragon Care LogoA strong 2H17 meant PGC met or exceeded guidance and expectations for the full year. Vital signs are good; revenue growth, margin expansion, and strong operating cash flow are a healthy combination. Evidence suggests the strategy to consolidate a fragmented industry is well considered. Businesses are being successfully integrated onto the growing platform, synergies extracted, and cross-selling opportunities targeted. We have upped our valuation to $1.12 (prior $1.05) on the back of a solid FY17 and believe there is both organic and acquisitive growth upside. Buy maintained.

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Orbital (OEC) - Drones To Provide The Lift

Orbital Corporation LogoPreliminary FY17 results are disappointing and below expectations, although the value in the business relates to significant opportunity for growth in the UAVe segment. Earnings forecasts are strongly weighted to this sector. Gains have taken the share price closer to our revised valuation of $0.75 (prior $0.90). Forecasting risk is elevated and we reduce to hold (prior buy) in the near term as realisation of the UAVe potential will take time.

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Gage Roads (GRB) - Turning On The Taps

Gage Roads LogoOne year into its 5-year strategy, GRB has comfortably delivered against expectations. The latest quarterly showed strong operating cash inflow and unaudited earnings ahead of our forecasts. Marketing efforts and growing brand awareness has shifted the sales mix towards proprietary products, boosting the FY17 GP margin to an impressive 58%. Sales growth through independent retailers and the on-premise market validates GRB’s “return to craft” strategy. Upgrades to earnings on the back of the latest results improves our blended valuation to $0.066 (prior $0.061). We maintain a positive view and buy call.

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Sandfire Resources (SFR) - Clock Is Ticking

Sandfire Resources LogoSandfire Resources (SFR) produced a solid final Q for FY17 with 17.1kt Cu and 9.7koz gold in concentrate (+5% and +8% QoQ) beating Argonaut’s forecast of 16.8kt Cu and 9.5koz gold. SFR finished FY17 with 67.1kt Cu and 38.6koz gold, within guidance of 65-68kt Cu and 35-40koz gold. Annual C1 costs of US$0.93/lb were below the guidance range of US$0.95-1.05/lb. The Company has broken ground on the Monty deposit (70% SFR: 30% Talisman Mining [TLM]) with the commencement of the underground boxcut. Argonaut maintains a HOLD recommendation with a $6.10 target price (previously $6.05).

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MZI Resources (MZI) - Production Improving, Debt Looming

MZI Resources LogoMZI Resources (MZI) released June Q production with a significant improvement in ore mined and processed (+13% and +14% respectively QoQ). The Company also achieved record sales 23.4kt of mineral sands products generating proceeds of $14.8m. Operations at the Keysbrook mine appear to be stabilising following the installation of the Mining Field Unit (MFU). Balance sheet risk remains our key concern with a US$21m debt repayment to Resource Capital Fund (RCF) due in the first week of December. MZI is currently exploring options to achieve a simpler and more efficient capital structure. Argonaut maintains a HOLD recommendation with a revised target price of $0.38/sh.

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