Latest Research

Threat Protect (TPS) - Been Busy Buying Lines

Threat Protect LogoRevenue picked up in the December Q and M&A activity saw TPS’s direct monitored lines grow by over 50% to ~8,200 connections. TPS is evaluating additional funding options to maintain the acquisition strategy that should result in operational and financial benefits as utilisation increases. We maintain a Speculative Buy call on a valuation of $0.26 (lower than the prior $0.28 largely due to the increased net debt position).

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Argonaut Micro Caps - Interims Preview

Argonaut LogoIn our FY17 results preview (August 2017) we flagged GRB and CLX as top picks in our ‘microcap’ universe. The share prices of both stocks have performed well since then. GRB has more than doubled, while CLX’s >20% gain has pushed the Company into our ‘small cap’ universe. Our key picks heading into FY18 interims are TPS and BOT. TPS turned the corner in 4Q17, has earnings visibility and a clear growth strategy, and we believe offers the best value among our microcap stocks that have earnings. Out of the earlier stage speculative stocks we believe BOT, with its more imminent catalysts, presents the most likely case for near-term gains.

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Saracen Mineral Holdings (SAR) - December Quarter Production

Saracen Mineral Holdings LogoSaracen (SAR) released December Q results with group production of 78koz, down 4% QoQ, at all-in sustaining costs (AISC) of A$1,176/oz (vs Sept Q AISC $1,008/oz). 1H production of 158koz is tracking well above the 300koz guidance for FY18. Cash increased to $82.9M (from $60.5m). We expect the 2HFY18 will be equally positive with high grade ores from Kailis and productivity improvements at Carosue Dam. Exploration continues to highlight the potential for mine life extension ahead of the upcoming 5-year plan. Despite the positives Argonaut continues to believe the stock is trading ahead of our risk weighted DCF valuation. We retain our preference for producers on significantly cheaper metrics such as Ramelius Resources (RMS, Not rated) and emerging producers such as Dacian Gold (DCN). We maintain our SELL recommendation and a revised $1.46 target price (prior $1.50).

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Argonaut Small Caps - Interim Reviews

Argonaut LogoSmall caps (ex-mining services) under coverage have performed well in recent months and are up 28% on average since 30 June 2017. Over this period GCS has fared the best (up 48%), TOX is up 43% following the bid from CWY in December, and CLX is up 40%. Exposure to the east coast and infrastructure has helped the share prices of DCG and SXE climb by more than 30%. PGC is up 5%, and ASB is up the least (although the 1% gain masks sharp moves both ways during the period).

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Threat Protect (TPS) - Executing

Threat Protect LogoThe latest two acquisitions from the existing monitoring client base means TPS has converted close on 3,000 reseller lines to direct lines so far this half. Boosting revenue, with little associated cost impact, adds to the good run-rate evident in the last two quarters. We expect TPS to continue with this strategy, leveraging the underutilised control rooms and positively impacting margin. We maintain our speculative buy recommendation on a blended valuation of $0.28 (this unchanged on prior after taking into account the 1 for 7 share consolidation ratified at the recent AGM).

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