Tony Locantro, Alto Capital
BUY RECOMMENDATIONS
Pointerra (3DP)
Chart: Share price over the year
Provides a cloud based solution for managing, visualising and sharing 3D point clouds. I expect the company to move towards cash flow neutral and positive status. Then, I believe there’s potential for a share price re-rating. 3DP is one of my preferred small industrial growth opportunities. The shares closed at 3.2 cents on September 21.
Metal Bank (MBK)
Chart: Share price over the year
The first drilling program at its Eidsvold project in Queensland has intersected moderate grade gold, but vindicates MBK’s exploration method. The next phase of bedrock drilling at its Triumph project will focus on bulk tonnage targets, with the potential for a significant gold discovery. MBK is methodically working on two large scale projects and recent share weakness provides a buying opportunity. The shares closed at 2.6 cents on September 21.
HOLD RECOMMENDATIONS
Great Boulder Resources (GBR)
Chart: Share price over the year
Recently announced a significant gold target at the Tarmoola project in WA, where rock chip samples have returned up to 24 grams a tonne. I believe the major nickel-copper-cobalt exploration program at Mt Venn shows potential, considering the 2km anomaly where previous drilling for water by Gold Road Resources hit mineralisation on the outer edges of the system.
PharmAust (PAA)
Chart: Share price over the year
PAA is making progress on the reformulation of its drug monepantel (MPL), which is in phase II trials for canine cancer. PAA has secured patents for cancer and non cancer applications of MPL in key markets. Its recent market capitalisation was around $10 million. We expect subsidiary Epichem to generate revenue of about $4 million a year. PAA remains my preferred junior biotech company given I believe it has strong upside potential. The stock closed at 5.8 cents on September 21.
SELL RECOMMENDATIONS
InvoCare (IVC)
Chart: Share price over the year
The funeral home, cemeteries and crematoria operator has been an outstanding performer. Now may be a good time to consider taking profits given the stock closed 2 cents shy on September 21 of its 12-month high of $15.56. IVC remains a good business, but, in my view, risks are to the downside.
Commonwealth Bank of Australia (CBA)
Chart: Share price over the year
Any correction in Sydney and Melbourne’s property market leave the banks potentially exposed to bad debts. Another concern is the impact from any interest rate rise on already high personal debt levels. Money laundering allegations is a major issue for the CBA. The company’s share price is way off its peak. Prefer others.
Robert Makdissi, Baillieu Holst
BUY RECOMMENDATIONS
Xero (XRO)
Chart: Share price over the year
The company reported subscriber numbers had passed the 1 million milestone earlier this year. As a result, costs as a percentage of increasing revenue continue to fall. While research and development spending remains high, we believe this will continue to enhance the customer’s value proposition. This should bolster the company’s subscription base and we expect continuing strong growth momentum.
Beach Energy (BPT)
Chart: Share price over the year
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Full year results showed stronger than expected revenue and net profit. A better than expected cost profile was also encouraging. This gives us confidence in management’s ability to efficiently operate assets. Along with a strong upgrade in reserves, we think BPT is best placed to take advantage of stabilising energy prices.
HOLD RECOMMENDATIONS
MNF Group (MNF)
Chart: Share price over the year
Despite recent share price strength, we see strong growth rates for this telecommunications company. MNF refreshed its virtual PBX offering in July 2017 as part of a new campaign to increase penetration in the small to medium sized business market. The newly developed pulse software is ready to be rolled out to more customers after winning a government tender. The company is also adding mobile (via a deal with Telstra) to its domestic retail offering. These products will assist in generating strong organic growth going forward.
Ainsworth Game Technology (AGI)
Chart: Share price over the year
The company’s recent result exhibited a stronger second half performance, as was guided by the company. We feel AGI’s fortunes are improving since profits stalled in fiscal year 2014. In Australia, we expect arcade game Pac-Man to lead the resurgence in a market that’s now saturated with Aristocrat’s Lightning Link. However, positive gaming expo commentary doesn’t always convert to sales. In North America, the outlook appears much more innovative, with new jurisdictions and a new corporate partnership.
SELL RECOMMENDATIONS
Sydney Airport (SYD)
Chart: Share price over the year
While expecting international passenger growth to remain robust, the company’s valuation appears stretched to us. In our view, any increase in bond yields could pressure its share price due to higher debt costs and potentially weaker demand for bond proxy equities.
Commonwealth Bank of Australia (CBA)
Chart: Share price over the year
Allegations the CBA had breached money laundering laws and the subsequent investigation creates a medium term headwind for the stock. We believe it would be prudent to lighten holdings as its premium to other banks may continue to erode.
Gavin Wendt, MineLife
BUY RECOMMENDATIONS
Middle Island Resources (MDI)
Chart: Share price over the year
The company’s Sandstone project in the WA goldfields represents an advanced, near term potential gold start up in a first class mining jurisdiction. The project comprises granted mining leases, a 600,000 tonnes a year treatment plant and associated infrastructure that can be refurbished relatively quickly for less than $10 million, based on independent estimates. Although there’s insufficient resources to currently justify a re-start of operations, there’s exploration and corporate options to bring potential mill feed up to the required level. The stock finished at 2 cents on September 21.
Allegiance Coal (AHQ)
Chart: Share price over the year
Recently released results of the revised stage 1 pre-feasibility study of its Telkwa coking coal project in Canada reinforce its viability as a stand alone small mine operation, positioned in the lowest five-percentile of the global seaborne metallurgical coal cost curve. Based on an initial annual mining rate of 250,000 saleable tonnes, it would boast a 19 year life with an ultra low average strip ratio. Start up capital expenditure is low at $US35 million, and the focus is on permitting stage 1 production. The shares finished at 3.8 cents on September 21.
HOLD RECOMMENDATIONS
Sipa Resources (SRI)
Chart: Share price over the year
Diamond drill targets at the Obelisk prospect within the Paterson North copper-gold project in Western Australia have been further refined and upgraded, with a 1500 metre follow up drill program now underway. The latest results have defined a 4km zone of anomalous copper greater than 250 parts per million (plus other elements), with a more intense area greater than 900 parts per million copper. The company update has increased overall confidence into what is potentially a strong mineralised system. We await results from the drill program with great interest. The stock finished at 1.1 cents on September 21.
Mustang Resources (MUS)
Chart: Share price over the year
Mustang’s ruby inventory at its Montepuez project in Mozambique has reached 277,852 carats, meaning it will comfortably exceed 300,000 carats by the time of its maiden tender between October 27 and October 30 in Port Louis, Mauritius. This compares with Mustang’s initial goal of accumulating a 200,000 carat inventory in time for the auction. The enhanced inventory stems from record mine production rates and increases the potential for higher sales and revenue at the upcoming auction, which we await with great interest. The stock closed at 8.1 cents on September 21.
SELL RECOMMENDATIONS
Pilbara Minerals (PLS)
Chart: Share price over the year
Key contracts have been awarded and senior personnel appointments have been made with respect to the company’s advanced Pilgangoora lithium-tantalum project in Western Australia, where project construction activities are accelerating. With the bulk of goods and services for the first stage of a 2 million tonne a year development already procured, Pilbara will now allocate additional resources to the 5 million tonne a year expansion program. It aims to complete a definitive feasibility study by mid 2018. The stock remains one of the leading lithium sector contenders, but some investors might consider taking some profits.
West African Resources (WAF)
Chart: Share price over the year
Latest results from diamond drilling at the company’s Sanbrado gold project in Burkina Faso have continued to return high grade gold intercepts. These include 8 metres at 17.5 grams a tonne gold from 452 metres (including 1 metre at 116 grams a tonne gold) and 21 metres at 2.30 grams a tonne gold from 514 metres (including 2 metres at 4.6 grams a tonne gold). The results extend the high grade gold mineralisation at the M5 deposit a further 70 metres down-dip. Existing investors might look to lock in some profits given the stock’s strong recent run.
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