Three Diversified Stocks with Long-term Growth Potential - HIO, BIT, KFM

1. Hawsons Iron Ltd (Recommendation: Speculative Buy, Market Cap: ~$78.65 million)

Hawsons Iron Ltd (ASX: HIO) is a mineral exploration company with a majority interest in the Hawsons Iron Project, in addition to other magnetite interests in the emerging Braemar Iron Province.

Improved Bottom Line in FY21: For the year ended 30 June 2021 (FY21), HIO reported a net loss of ~$2.54 million, an improvement from the loss of ~$4.04 million in FY20, due to the reversal of accrued back pay for the Managing Director and Company Secretary ($386,170) and reduction in external promotion costs for the Hawsons Iron Project.

Improved Cash Balance: Due to the share purchase plan announced in October 2020, successful private placement to sophisticated and professional investors, which was completed in April 2021, the company’s cash position increased from year end 30 June 2020 by ~$1.63 million to ~$2.35 million as at 30 June 2021. The cash position further improved in the September 2021 quarter to ~$33.95 million, due to the raising of ~$35.59 million (before costs) through a fully underwritten private placement and an entitlements issue to shareholders. The company had a nil debt-to-equity ratio in FY21.

Cash and Cash Equivalent Trend (Source: Analysis by Kalkine Group)

Outlook: Looking ahead, the company expects the life of mine tonnages to increase further at the Hawsons Iron Ore Project with the planned resource extension drilling being initiated in October 2021. The company is targeting to start-up the production of 10 million tonnes per annum in 2024.

SWOT Analysis: 

Stock Recommendation:

• Over the last six months, the stock has been corrected by ~19.28%.
• The stock has a 52-week low and high of $0.03 and $0.221.
• With its uniquely soft and high-quality product, the company seems ideally positioning to lead the way in ESG innovation, “Green Steel” enabling and unlocking shareholder value.
• Key Risks: Fluctuations in the price of Iron Ore, Exploration-Related Risk, COVID-19 Uncertainties, etc.
• Considering the company’s improving cash balance, its significant asset base, improving bottom line, modest outlook and key risks associated with the business, we give a “Speculative Buy” rating on the stock at the current market price of $0.115, as on 10 December 2021, 12:30 PM (GMT+10), Sydney, Eastern Australia.

HIO Weekly Technical Chart, Data Source: REFINITIV

2. Biotron Limited (Recommendation: Speculative Buy, Market Cap: ~$61.77 million)

FY21 Result Highlights: Biotron Limited (ASX: BIT) is mainly involved in the research, development, and commercialisation of drugs targeting significant viral diseases with unmet medical need. During FY21, the company finalised the designs of two clinical trials of the Company’s lead anti-HIV-1 drug, BIT225, and progressed documentation for ethics and regulatory approvals. For the full year, the company incurred a net loss of ~$3.19 million, an improvement from the loss of ~$3.57 million in FY20.

Cash and Debt Scenario: As at 30 June 2021, the company had cash and cash equivalent of $4.2 million, down from $7.66 million as at 30 June 2020. Further, the company has lease liabilities of $6,347. The company’s cash and cash equivalent as at 30 September 2021 stood at $3.44 million.

Current Ratio Trend (Source: Analysis by Kalkine Group)

Outlook: BIT believes that it has the portfolio of antivirals, which uniquely combine antiviral inhibition with immunomodulatory activity. Looking ahead, it is focused on achieving a commercial outcome for its promising antiviral programs whilst continuing to progress its clinical HIV-1 program. The company is also pursuing all avenues to progress BIT225 drug into human trials.

SWOT Analysis: 

Stock Recommendation:

• Over the last three months, the stock has provided a return of ~68.62%.
• The stock has a 52-week high and low of $0.115 and $0.046.
• The company is in discussion with its USA advisors and consultants to expedite progression of BIT225 into human trials for treatment of SARS-CoV-2 infection.
• Key Risks: Failure of Clinical Trials, Regulatory Risks, COVID-19 Uncertainties, etc.
• Considering the positive clinical results from the company’s lead clinical asset - BIT225, the company’s ongoing focus on achieving a commercial outcome for its promising antiviral programs, modest outlook, and key risks associated with the business, we give a “Speculative Buy” rating to the stock at the closing price of $0.085, down by ~3.41% as on 10 December 2021.

BIT Weekly Technical Chart, Data Source: REFINITIV

3. Kingfisher Mining Limited (Recommendation: Speculative Buy, Market Cap: ~$7.18 million)

Kingfisher Mining Limited (ASX: KFM) is a copper-gold development company focused on increasing shareholder wealth through the acquisition, exploration and development of mineral resource projects throughout Western Australia. The company is involved in the exploration at its 100% owned projects in the Gascoyne Mineral Field in Western Australia.

FY21 Result Highlights: For the year ended 30 June 2021, KFM reported net loss of $967,004, compared to net profit of $24,771 in FY20. Over the year, the company identified various high-quality targets and has added to its portfolio by acquiring additional tenure. The company confirmed that it has discovered new high-grade copper and associated gold mineralisation at the Green Hills Prospect.

Cash and Debt Scenario: As at 30 June 2021, the company had a cash and cash equivalent of ~$4.32 million, up from $555 as at 30 June 2020. Further, the company had total borrowings of $0.11 million. At the end of the September 2021 quarter, the company had cash and cash equivalent of $4.0 million.

Cash Balance Trend (Source: Analysis by Kalkine Group)

Outlook: KFM has an exciting exploration tenure that covers 1,406km² in the underexplored Ashburton and Gascoyne Mineral Fields. The company is continuing its exploration work at projects at a fast pace with surface mapping and sampling planned for newly identified and high-priority areas at Boolaloo. Notably, the company’s planned activities until FY22 end are fully funded.

SWOT Analysis:

Stock Recommendation:

• Over the last three months, the stock has corrected by ~12.82% and is trading lower than the average 52-week price level band of $0.165 and $0.330, offering a decent opportunity of accumulation.
• On a TTM basis, the company is trading at a price-to-book value multiple of 1.1x, lower than the industry (basic materials) median of 2.4x, thus seems undervalued.
• Key Risks: Exploration-Related Risks, COVID-19 Pandemic Risks, Fluctuations in Gold Copper Prices, etc.
• Considering the company’s ongoing exploration programs, commencement of surface geochemistry sighter program across its Kingfisher, Mick Well and Arthur River tenements, decent outlook, current trading level, valuation on TTM basis, and associated key risks, we give a “Speculative Buy” recommendation on the stock at the current market price of $0.170 as on 10 December 2021, 12:30 PM (GMT+10), Sydney, Eastern Australia.

KFM Weekly 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.

Disclaimer

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