Latest Research

Gascoyne Resources (GCY) - Site Visit To Dalgaranga

Gascoyne Resources LogoArgonaut visited GCY’s Dalgaranga operations this week. The March Q will continue to be a hard grind for GCY, but many of the issues which plagued the operation in late 2018 should be largely mitigated near term. The appointment of key hires including Richard Hay (ex-EVN Mt Carlton GM) does give comfort for improved operational reliability, however high stripping, unplanned outages and reliance on low grade stockpiles will continue to see difficult conditions persist in the March Q. We retain our Speculative Buy recommendation but highlight the likelihood that whilst production conditions have improved vs the Dec Q, it does leave little room for error if further unplanned outages or issues arise. GCY remains a high risk/reward scenario until the June Q – Sept Q as ore availability and grades are forecast to improve. Speculative Buy maintained.

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Peet (PPC) - Interims Preview

Peet LogoWhile our expectations for a solid 1H19 result have not changed, longer finance approvals processes, softer economic conditions, and weakening property sentiment has led to a downgrade of our medium term earnings forecasts. We also build greater risking into our valuation calculations to get to a revised valuation of $1.30 (prior $1.50). Despite the overhang of negative sentiment, the gap from the current share price is enough to warrant a maintained BUY call, particularly when considering the Company’s large, diverse and typically low cost land bank portfolio, together with its strong balance sheet and capital-light funding model.

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Austal (ASB) - Longer Term Confidence Boost

Austal LogoNew guidance suggests FY19 revenue of $1.9b, well up on the prior $1.3-1.4b, and 1H19 EBIT of $39-41m. This is a near term positive, but the longer term implications is the key takeaway in our view; procurement activities on the back of a number of recent awards demonstrate the medium term workload and endorse ASB’s capability, while we would expect margins on vessel programmes and individual builds to pick up over time. Our valuation climbs to $2.45 (prior $2.30) on earnings upgrades and we maintain a BUY call.

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Otto Energy (OEL) - Lightening Strikes: Green #1 Is A Discovery

Otto Energy LogoOEL’s second well in the Hilcorp drilling program, Green#1, has intersected a significant hydrocarbon column exceeding pre-drill estimates. The well has been completed as a producer and will be tied into a nearby pipeline and will be put on production by the end of March 2019. OEL is about to spud the Winx-1 well in Alaska and will also be drilling the third well in the Hilcorp program. We maintain our BUY recommendation, and we have upgraded our price target to $0.13 (prior $0.09).

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Gage Roads (GRB) - First Half Updated

Gage Roads LogoGRB’s progress report for 2Q19 showed continued brand product growth and a solid gross margin. However, lower than expected overall production volume meant 1H19 unaudited EBITDA of $2.1m was below our estimate. We have dropped our full year production volume forecast, and pencil in $7.0m EBITDA for FY19 (noting 2H19 will benefit from a full 6 months of Matsos). Our revised target price of $0.122 (prior $0.129) continues to back a BUY call, as does the momentum in proprietary brand growth and the upside from an evolving strategy for the east coast.

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