1. Hastings Technology Metals Ltd (Recommendation: Speculative Buy, Market Cap: ~$304.22 million)

Hastings Technology Metals Ltd (ASX: HAS) is a rare earths company involved in the development of its flagship Yangibana project that contains one of the most highly valued NdPr deposits in the world.

Increased Operating Income During H1FY21: For H1FY21, the company operating income of $100,062, up from $96,576 in H1FY20, driven by the receival of COVID-19 government grants. As a result of cost-saving measures introduced during COVID-19, the company saw reduced director fees, employee costs, and rent abatement in H1FY21. The comprehensive loss of the consolidated entity for H1FY21 stood at $2.599 million. During the March quarter, the company raised $100.7 million (before costs) through a two-tranche equity placement. The proceeds of the placement will be used to advance the development of the Yangibana Rare Earths Project.

Cash and Debt Scenario: As a result of the capital raising activities during H1FY21, the company’s cash balance grew to $19.98 million as at 31 December 2020. The company’s cash balance was further improved to $82.7 million in the March 2021 quarter. The current ratio for H1FY21 stood at 10.34x, up from 5.25x in H1FY20. 

Current Ratio Trend (Source: Analysis By Kalkine Group)

Outlook: Looking ahead, the company is focused on advancing the development of the Yangibana Rare Earths Project. HAS intends to secure an optimal capital structure to deliver long-term value to all stakeholders. With its world-class Yangibana project, the company is well placed to take advantage of the increasing price for NdPr oxides.

SWOT Analysis:

Stock Recommendation:

• The stock of HAS has corrected by ~23.4% in the last six months and is trading lower than the average 52-week price level band of $0.115 and $0.270, offering a decent opportunity for accumulation.
• The infrastructure construction of the Yangibana Project is scheduled to start in mid-2021 ahead of the first production in late 2023.
• Key Risks: COVID-19 Uncertainties, Exploration-related Risks, Fluctuations in the Prices of Rare Earth Elements, etc.
• Considering the company’s expanded resource base, favourable drilling results at Yangibana Project, recent capital raising activities, current trading level, and associated key risks, we give a “Speculative Buy” rating on the stock at the current market price of $0.175, (as on July 23, 2021, 11:40 AM (GMT+10), Sydney, Eastern Australia).

HAS Weekly Technical Chart, Data Source: REFINITIV

2. Nova Minerals Limited (Recommendation: Speculative Buy, Market Cap: ~$201.71 million)

Nova Minerals Limited (ASX: NVA) is a mineral explorer focused on gold exploration from its Estelle Gold Project in Alaska. The company also has an indirect interest in the Canadian Thompson Brothers Lithium Project through a substantial stake in Snow Lake Resources Ltd.

• H1FY21 Result Highlights: During H1FY21, the company raised $21 million to accelerate drilling at the Estelle project. For H1FY21, the company incurred a total comprehensive loss of $3.2 million, compared to the loss of $2.7 million in H1FY20, mainly due to the realisation of foreign currency translation loss of $1.91 million.
• Cash and Debt Scenario: At the end of H1FY21, the company had cash balance of $23.24 million. The current ratio for H1FY21 stood at 15.25x, up from 5.25x in H1FY20. The company had nil debt to equity ratio in H1FY21. As at 31 March 2021, the company had cash of $20.25 million.

Current Ratio Trend (Source: Analysis by Kalkine Group)

• Outlook: The company is currently focused on increasing its global resource via its ongoing infill and extensional drilling programs. Its topmost priority is to unlock the significant resource upside potential across the greater Estelle Gold Project area. An interim scoping study based on the current 4.7Moz resource at Korbel Main is on for delivery in July 2021.

SWOT Analysis:

Stock Recommendation:

• The stock of NVA has corrected by ~23.33% in the last three months and is currently trading lower than the average 52-week price level band of $0.044 and $0.235.
• The company is focused on advancing its aggressive exploration programs at the Estelle Gold Project to both expand the existing deposit areas and identify new targets.
• Key Risks: Risks related to changes in gold price, Access to adequate infrastructure to support exploration activities; Foreign Currency Risk, etc.
• Considering the significant mineralization observed at RPM, favourable drilling results at Korbel, decent liquidity position, ongoing exploration programs at the Estelle Gold Project, and current trading level, we give a “Speculative Buy” rating on the stock at the current market price of $0.120 as on 23 July 2021.

NVA Daily Technical Chart, Data Source: REFINITIV

3. Adveritas Limited (Recommendation: Speculative Buy, Market Cap: ~$40.83 million)

Adveritas Limited (ASX: AV1) is an ad tech innovator that uses its proprietary software as a service, TrafficGuard® to create transparency in the digital ecosystem.

• Significant Rise in Freemium Subscribers and Customer Numbers: During H1FY21, AV1 witnessed 167% YoY growth in TrafficGuard Freemium subscribers and 150% YoY growth in customer numbers. The company’s TrafficGuard revenue post commercialisation grew by 8% to $462k in H1FY21, reflecting marketing initiatives and strategic pivot to focus on highly scalable product offerings such as pay per click. Statutory loss after income tax stood at ~$5.8 million in H1FY21.
• Cash and Debt Scenario: As at 31 December 2020, the company had a cash balance of $6.7 million and nil debt in its balance sheet, supporting accelerated growth initiatives. Considering the proceeds of the recent $3 million placement, and the funds raised from the exercise of the outstanding listed option, the company’s cash balance is expected to increase to around ~$11.8 million. The current ratio for H1FY21 stood at 4.77x, up from 2.79x in H1FY20.

Current Ratio Trend (Source: Analysis By kalkine Group)

• Outlook: Looking ahead, the company is focused on increasing its investment into sales and marketing to accelerate the growth opportunities available. For H2FY21, the company expects substantial growth in revenue. The company believes that its rapidly growing customer base will underpin its future growth.

SWOT Analysis:

Stock Recommendation:

• Over the last three months, the stock has corrected by ~31.03% and is trading lower than the average 52-weeks price level band of $0.078 – $0.225, offering a decent opportunity for accumulation.
• By Securing ‘land and expand’ contracts with global companies, the company will be able to improve its ability to increase revenue over time as it looks to expand the range of services it offers.
• Key Risks: Technology Disruption, Cyber Security Risk, Foreign Currency Risk, etc.
• Considering the company’s growing customer base, continued focus on accelerating the growth opportunities, expected revenue growth in H2FY21, current trading level and associated key risks, we give a “Speculative Buy” rating on the stock at the current market price of $0.100, down by 4.762% as on 23 July 2021.

AV1 Daily Technical Chart, Data Source: REFINITIV

Note 1: The reference data in this report has been partly sourced from REFINITIV.

Note 2: Investment decision should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and subject to the factors discussed above.

Technical Indicators Defined:

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

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

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