Latest Research

Cyclical Industrials - Into 2019

Argonaut LogoLeading into the interim reporting period we have reviewed our cyclical industrial stocks under coverage. We address risks to forecasts in a potentially slower, credit-constrained world, and revisit our valuation calculations to reflect this uncertainty. Barring a debt default induced crisis (not out of the question, but very hard to predict), we find value at acceptable risk in a number of stocks following unreasonable share price falls, notably ASL (BUY, valuation $2.00), PEA (BUY, valuation $0.73), and SXE (BUY, valuation $0.85).

read more...

Matrix - Larger order improves outlook

Matrix Logo Matrix's recent $15m RBM contract boosted the order book to $43m, and was followed by a $3m placement to help support greater workflow. It also helps underpin FY19 revenue guidance of $35-40m (in line with our $37.0m forecast). Recent trends are encouraging, although forecasting remains difficult. We expect near term sales to be predominantly in the oil & gas space (and therefore influenced by the oil price), while penetration into other sectors will only be potentially meaningful in the longer term. Nevertheless, at the current price we upgrade to SPEC BUY (prior HOLD) on a revised valuation of $0.47 (prior $0.50).

read more...

Myanmar Metals - Already a giant, but still growing

Myanmar Metals LogoMyanmar Metals (MYL) has discovered a new high-grade polymetallic lode at the Bawdwin deposit. Drilling aimed at following up an electromagnetic geophysical anomaly has intercepted 16m @ 8.5% Zn+Pb, 4.7oz/t Ag and 0.9% Cu beneath the Yegon Ridge on the opposite side of the Bawdwin Valley. Importantly, the discovery hole has just hit the edge of the chargeable target, with stronger anomalies to the north and south. In addition, further drilling in the Meingtha gap has returned more high-grade hits showing potential to link the fault offset China and Meingtha lodes. MYL is not only discovering more mineralisation with ongoing drilling, but it is reclassifying areas of previously modelled waste into ore within the China starter pit. This will significantly reduce the already low strip ratio of 2.8:1. SPEC BUY recommendation and $0.20 target price maintained.

read more...

Kidman Resources - Mt Holland Integrated PFS

Kidman Resources LogoKidman Resources (KDR) release an Integrated Prefeasibility Study (PFS) on the Mt Holland Lithium Project (50% KDR, 50% SQM). The study incorporates a mine, spodumene concentrator and lithium hydroxide (LiOH) refinery. This is an update on the October 2018 study which had the mine and concentrator at a scoping level only. The release incorporates a maiden Ore Reserve of 94.2Mt @ 1.5% Li2O. Key changes to the previous study include a US$18m decrease in capex (before owner costs) to US$737m and an 8% increase in C1 costs to US$4,507/t. KDR’s estimated post-tax NPV10, applying a life of mine (LOM) average LiOH price of US$15,115/t, decreased from US$2.3b to US$2.2b and the IRR decreased 1.1% to 26.6%. Argonaut maintains a BUY recommendation with a revised target price or $2.00 (previously $2.10).

read more...

Stanmore Coal - Takeover bid well undervalued

Stanmore Coal LogoStanmore Coal (SMR) is currently subject to a $0.95/sh all cash takeover offer by Golden Investments Pte. Ltd, owned by Singapore based Golden Energy & Resources Ltd and Ascend Global Investment Fund. The Independent Expert report, released yesterday with SMR’s Target Statement, outlined a sum of parts valuation of $1.48-1.90/sh. While Golden Investments has acquired a 19.8% stake from Greatgroup Investments, we believe the Bidder will fall well short of the conditional 50% acceptance at the current offer price. SMR recently upgraded FY19 guidance from 1.8Mt to 2.0Mt at FOB costs of A$86/t generating EBITDA between $130-150m. Argonaut maintains a BUY recommendation with a revised target price of $1.66 (from $1.40).

read more...