Stocks Under The Spotlight – The Good, The Bad – Keytone Dairy, 1414 Degrees, Paladin Energy, Sundance Energy Australia

The stock market consists of many company companies, which are under the spotlight of long-term institutional investors as well retail investors. There are always some aspects that we like about them and some which we do not. Let’s have a look at four stocks under the spotlight along with their recent updates.

Keytone Dairy Corporation Limited

Keytone Dairy Corporation Limited (ASX: KTD) is engaged into the manufacturing as well as export of dairy and nutrition products having significant focus on powdered dairy products.

Received First Order from Walmart

As per the release dated 11th September 2019, the company announced that Walmart (China) Investment Co., Ltd has awarded a contract.

  • Under the terms of contract, the company will be manufacturing milk powder for a wholly owned subsidiary of Walmart Inc, Sam’s Club West, Inc. (China).
  • The above-stated contact confirms receipt of the first order from Walmart China.
  • The first order amounts to around NZD107,000 for Sam’s Club China private label whole milk powder and skim milk powder.

Changes in Executive Leadership

The company recently announced some changes in its executive leadership through a release dated 10th September 2019, which includes:

  • The company stated that Chief Executive Officer (CEO), James Gong will now manage and grow the New Zealand business as Chief Executive Officer of its wholly owned subsidiary Keytone Enterprises (NZ) Company Limited.
  • When it comes to the Group CEO, the company has appointed Danny Rotman to the position of Group Chief Executive Officer from CEO of KTD’s wholly owned subsidiary Omniblend Pty Limited
  • The company further added that the changes have become effective from 10th September 2019 on an immediate basis.

The company has recently rolled out additional product lines into METRO Supermarkets in China. It is also continuing Integration of Omniblend.

In another update, KTD updated the market with the results of 2019 Annual General Meeting, wherein the following resolutions were passed:

  • Resolution 1- Adoption of Remuneration Report
  • Resolution 2- Re-Election of Director Peter Hobman
  • Resolution 3- Approval of 10% Placement Capacity
  • Resolution 4- Issue of Consideration Securities to Vendors
  • Resolution 5- Issue of Placement Shares
  • Resolution 6- Election of Proposed Director Daniel Rotman
  • Resolution 7- Election of Proposed Director Arie Nudel

On the stock’s performance front, the stock of Keytone Dairy Corporation Limited was last traded at a price of A$0.400 per share on 11th September 2019. It provided negative return of 1.25% in the period of last six months. On YTD basis, the stock witnessed a rise of 2.60%.

 

1414 Degrees Limited

1414 Degrees (ASX: 14D) is a commercialising bulk energy storage solutions company. Its solutions facilitate transformation of intermittent renewable generation into baseload electricity as well as decarbonise heat supply.

Key points from Chairman’s letter to shareholder

On 11th September 2019, the company published Chairman’s letter, wherein it has clarified on the enquiries from shareholders about the share price performance and current market sentiments as well.

  • The company stated that there have been no major changes in its share register and its pilot installation programmes, preparation for sales of the biogas TESS (thermal energy storage systems)
  • 1414 Degrees Limited continues to progress systems in order to earn early revenues from operations on the National Electricity Market.

Negative Electricity Pricing

In another update, the company stated that post periods of negative electricity pricing various shareholders have raised questions that why the company’s thermal energy storage systems are not earning money from various events like batteries are reputed to be doing. However, the company answered that it would, in upcoming times acquire that capability.

  • The company further stated that the energy storage will not be economic from the intermittent negative electricity prices.

Financial Performance

The company reported revenue from continuing operations amounting to A$ 298,820 in FY19 as compared to A$ 63,387 in FY18, which reflects a rise of 371%. The company reported net cash outflow flow form the operating activities of A$ 4,134,023 FY19 as compared to A$ 3,122,416 in FY18.

On the stock’s performance front, the stock of 1414 Degrees Limited was last traded at a price of A$0.220 per share on 11th September 2019. It provided negative return of 42.86% in the period of six months. On YTD basis as well, the stock witnessed a decline of 40.00%.

Paladin Energy Ltd

Paladin Energy Ltd (ASX: PDN) is engaged into the development and operation of uranium mines in Africa

Key takeaways from Equity Raising Presentation:

The company is undertaking an equity raising through a non-underwritten placement amounting to A$30.2 million as well as a share purchase plan in order to raise A$7 million to its existing eligible shareholders in Australia and New Zealand (ANZ).

  • The company further stated that the issue price for non-underwritten placement and a share purchase plan will be 11.5 cents per share, which represents a discount of 14.8% to the last closing price of 13.5 cps on 10 September 2019 and also a discount of 16.7% to the five-day volume weighted average price  of 13.8 cps on 10 September 2019.
  • The lead manager for the equity raising is Euroz Securities Limited

Use of Proceeds

The proceeds of funds from the equity raising will be utillised in order to finance its working capital requirements. Which primarily include:

  • C&M costs associated with the Langer Heinrich mine
  • Exploration tenement holding costs

Impact of Equity Raising

The fund raised from the equity raising will primarily impact the unrestricted pro forma cash on balance sheet to increase to around US$46.2 million from US$25.4 million. The company will be issuing around 263 million new shares under the Placement.

Trading Halt

On 11th September 2019, Australian Stock Exchange through a release announced that the Paladin Energy Ltd has been under trading pause on the back of request made by PDN, as there is an announcement pending. However, the securities of the company would be in the trading halt until the earlier of the commencement of normal trading on 13 September 2019 or when the announcement is made.

On the stock’s performance front, the stock of Paladin Energy Ltd was last traded at a price of A$0.135 per share on 10th September 2019. It provided negative return of 18.18% in the period of six months. On YTD basis as well, the stock witnessed a decline of 18.18%.

Sundance Energy Australia Limited

Sundance Energy Australia Limited (ASX: SEA) is involved into exploration of oil and gas

As per the release dated 11th September 2019, the company updated the market about its decision to re-domicile to the United States from Australia through a proposed Scheme of Arrangement, which is subject to shareholder, judicial and regulatory approvals.

In the event, approval of Scheme of Arrangement by shareholder judicial and regulation, SEA would transfer its primary listing to Nasdaq, as well as it would cease to trade on the Australian Stock Exchange. The Board of Directors of the company has recommended that its shareholders vote in favour of the proposal.

Performance of Q2 FY19:

  • The company has $50 MM of available short-term liquidity on balance sheet before Dimmit proceeds
  • The company has announced Dimmit sale for an amount of $29.5MM purchase price and this adds to further liquidity upon close.
  • It reported Debt-to-Consensus 2019 EBITDA of 2.3X and no debt maturities until Q4 2022

On the stock’s performance front, the stock of Sundance Energy Australia Limited was last traded at a price of A$0.190 per share on 11th September 2019. It provided negative return of 28.77% in the period of six months. On YTD basis as well, the stock witnessed a fall of 24.64%.


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