Should you Invest in these Micro-Cap Stock Amid Market Volatility- RMY, PTR

RMA Global Limited

RMY Details

Robust Agent Engagement Drives Growth in 1HFY22 (Ended 31 December 2021): RMA Global Limited (ASX: RMY) offers online ratings, reviews, and statistics of real estate agents via its subsidiary, RateMyAgent Services Pty Ltd. RMY operates in Australia, New Zealand, and the US.

• The company reported a 13% Y-o-Y increase in its quarterly average of agents and a ~24% Y-o-Y rise in Australia's collected agent profile reviews during 1HFY22.
• In New Zealand, RMY witnessed a ~100% increase in the quarterly average of agents from ~870 in 1HFY21 to ~1,740 in 1HFY22, with collected reviews up by ~75% on pcp.
• RMY reported ~65% Y-o-Y growth in the Promoter (product) revenues in Australia to ~$1.85 million due to the product expansion and Awards season in February 2022.

Key Metrics Performance; (Analysis by Kalkine Group)

Key Risks: The company faces the risk of expansion to new geographies, seeking funds for the US growth, investments in the platform and technological changes.

Outlook: RMY focuses on increasing agent profile claims and reviews in the US and product enhancements to grow sales revenue in Australia, New Zealand, and the US. The US market is estimated to be more than ~20 times bigger than Australia. Hence, it is considered a vast addressable market opportunity with a dual agent system involving agents for the buyer and seller.

Stock Recommendation: The stock of RMY gave a negative return of ~21.73% in the past three months and a negative return of ~9.99% in the past six months. The stock is currently trading lower than the 52-weeks’ average price level band of $0.160 - $0.320. On a TTM basis, the stock of RMY is trading at a price to book value multiple of ~27.4x lower than the industry (Technology) average of ~32.5x, thus seems undervalued. Considering the current trading levels, growth in total revenue from subscription fees and promoter fees, plans to expand and accelerate monetisation of the US customer base, valuation on a TTM basis, and associated key business risks, we give a ‘Speculative Buy’ rating on the stock at the closing market price of $0.180, as of 24 March 2022. Markets are currently trading in a highly volatile zone due to specific macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.

RMY Daily Technical Chart, Data Source: REFINITIV 

Petratherm Limited

PTR Details

Operational Overview of 1HFY22 (Ended 31 December 2021): Petratherm Limited (ASX: PTR) operates an iron-oxide copper-gold (IOCG) portfolio of mineral exploration projects in South Australia (S.A.).

• In June 2021, PTR acquired the Woomera project, which is highly prospective for IOCG mineralisation. Gravity modelling work has been carried out, and multiple high priority IOCG drill targets have been identified.
• At the Comet gold project, PTR undertook drilling of the Target 14 Gold prospect and discovered a mineralised gold system necessitating further drilling.
• At the Mabel Creek IOCG project, exploration has identified two areas (Areas 5 and 13) reflecting IOCG style hydrothermal alteration. PTR plans to conduct additional geophysical surveying to help future drill targeting.
• PTR incurred ~$367,000 exploration costs mainly on account of the drilling operations at the Comet project. It reported ~$2.69 million cash as of 31 December 2021.

Comparative Key Financials; (Analysis by Kalkine Group)

Key Risks: The company faces the risk of identifying gold mineralisation on drilled targets, adverse climatic conditions, gold price changes, and funding risk for continuing project development.

Exploration Plans Ahead:

• As the S.A Government grant aids the Comet project exploration, PTR expects reimbursement of ~$147,500 in March 2022 and plans to continue exploration work at the Comet gold prospect.
• At the Woomera project, PTR focuses on seeking the necessary approvals for testing of the high priority targets identified at the earliest.

Stock Recommendation: The stock of PTR gave a negative return of ~15.90% in the past three months and a negative return of ~28.84% in the past six months. The stock is currently trading lower than the 52-weeks’ average price level band of $0.031 - $0.170. On a TTM basis, the stock of PTR is trading at a price to book value multiple of ~1.7x lower than the industry (Metals & Mining) median of ~2.3x, thus seems undervalued. Considering the low trading levels, nil debt levels, identification of high priority targets at the Woomera project and exploration planned at the Comet project, valuation on a TTM basis, and associated key business risks, we give a ‘Speculative Buy’ rating on the stock at the closing market price of $0.037, down by ~7.501% as of 24 March 2022. Markets are currently trading in a highly volatile zone due to specific macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.

PTR 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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