Stock markets around the globe are on a roller-coaster ride amid the outbreak of coronavirus and oil price war. Market volatility is very well seen even on ASX, which has recently witnessed a loss of $140 billion (traded below 6000). Moreover, investors take volatility in the market as a source of opportunity to create wealth for a long term, with the very basic idea that they use the up days to sell and the down days to add the stock to their portfolio.
Let’s witness the correlation of market volatility on performance of 5 small-cap companies trading at ASX. Also, their businesses, recent developments or activities and some of their way forward plans.
CDX blood pressure sensor can cause disruption in medical tech industry
A health technology company, CardieX Limited (ASX: CDX) creates device and digital based solutions to detect disorders in the large-scale population.
The Company states that the development of a radar-based blood pressure sensor is one of the holy grails in the field of medical technology and it possesses a capability to disrupt and displace a USD 45 billion industry.
Expansion of Two Clinical Trials:
- On 13 March 2020, CardieX notified about the development of two clinical trials with its current clients Bayer and AstraZeneca.
- ATCOR Medical, a 100% subsidiary entity of CDX, is aiding these trials by offering the lease of its data management related services and XCEL devices to both the companies for the complete duration of the trial.
- The Company also intends to have new trial contracts soon, thereby, adding a substantial increment to CDX’s revenue for 2020.
Also, in December 2019, CardieX raised additional funding of $1.5 million in pursuant to commitments from C2 Ventures Pty Limited. New shares were issued at a price of $0.0275 which represents 5 percent discount to the 15-day VWAP of CardieX.
AML’s Walford Creek Project is scaling new heights
ASX-listed company, Aeon Metals Limited (ASX: AML) is into the business of mineral development and exploration. AML owns 100 percent interest stake in the Walford Creek Copper Cobalt Project (Walford Creek Project) located in North-West Queensland.
Funds Granted of $1.65 million:
On 20 December 2019, the Company received a grant funds amounting $1.65 million for the research work which was already completed.
AML mentioned that the grant was related to the operation, selection and design of metallurgical activities that seeks to generate high grade concentrates.
Walford Creek Resource Upgrade:
The latest update on Walford Creek Project was disclosed by Aeon on 17 December 2019. Key highlights are as follows.
- Total Vardy & Marley Mineral Resources stood at 35.8mt @ 1.94 percent CuEq. Out of which, copper mineralisation was noted at 18.4mt @ 2.46 percent CuEq and cobalt peripheral was 17.4mt @ 1.39 percent CuEq
- Pre-Feasibility Study (PFS) for Walford Creek is scheduled for completion in second quarter CY 2020.
Outlook as mentioned in the interim report of the Company:
- During 2020 field program, AML intends to continue drilling within the Amy zone.
- Group’s borrowings from the OCP Asia Group are due to get mature on 17 December 2020 and is categorised as current liability. As at 31 December 2019, the Group’s current liability stands at $12.1 million as compared to $5 million current asset as at 30 June 2019. OCP Asia Group is also Aeon’s largest shareholder. These borrowings are secured by a charge over Aeon Walford Creek Limited, Group’s subsidiary.
AGR Repositioned for Early Cash Flow
ASX-listed company, Aguia Resources Limited (ASX: AGR) has a prime focus on the development and exploration of copper and phosphate mineral resource projects located in Brazil. The Company operates its offices in Australia (Sydney) and Brazil (Porto Alegre).
Aguia made certain changes as part of its strategy of fast-tracking assets into early cash flow. Additionally, with the introduction of new MD, Dr Fernando Tallarico to the system, significant progress has been made as follows.
- The operations were centred in Brazil with corporate offices been shut and delisted from TSX.
- Brazil is the world’s largest agribusiness exporter and is likely to double by 2024.
- Introduced direct application natural phosphate (DANF) with Life of Mine of 18 years and have low OPEX ($11.87 / tonne) and CAPEX ($9.72 million).
This project is an alternative to BFS project having high OPEX ($76.1 / tonne) and CAPEX ($112.1 million).
- Released Scoping Study for DANF natural phosphate and AGR expects to get a quick payback in 3.3 year with 51 percent of IRR.
Recently, Aguia released its second quarter and first half year results for the period ended 31 December 2019.
As at 31 December 2019, the Company’s cash at bank amounted to $1.81 million with no debt. Also, the working capital was $1.37 million because of private placement financings to raise a total of $1.67 million.
Key highlights from 2Q FY 2020 Results:
- As AGR is at a stage of exploration and evaluation and not producing any assets, the Company incurred the net loss of $0.798 million in 2Q FY 2020 as compared to $1.02 million in 2Q FY 2019.
- Business development expenditures was $0.21 million, reflecting an upsurge of $0.076 million from $0.14 million in prior period. This was due to increased technical consultants engaged after the nod of the Environmental Impact Assessment.
- Professional fees increased by $0.14 million, from 0.024 million to 0.16 million. Reason pertaining to this increase was the additional legal fees.
- Employee benefit expenditures and corporate expenses dipped by $0.13 million and $0.12 million on prior year because of staff reductions in Brazil and at corporate level respectively.
The snippets from 1H FY 2020 results are as follows.
- Corporate expenses of $0.66 million was materially consistent with the $0.67 million.
- Business development cost increased by $0.07 million on prior year, from 0.25 million to 0.32 million.
- Professional fees increased by $0.087 million on pcp to $0.17 million.
- Employee benefit cost decreased by $0.16 million on pcp, from 0.27 million to 0.11 million.
UNL Generates its First Operating Profit
Headquartered in Australia, United Networks Limited (ASX: UNL) is a provider of mobile roaming solutions. UNL products include Global Wi-Fi, SOS Alerts, Global eSIM and Global SIM. United Networks has teams operating across Asia, North America and Europe.
Since the appointment of Victor Tsaccounis as UNL’s CEO on 21 October 2019, the Company is working under a new strategy to create synergies with a focus on combining the businesses.
Acquisitions to enhance efficiencies:
United Networks had recently completed two acquisitions of telecom service provider companies. The two acquisitions include 100 percent stake of Symmetry Networks Pty Ltd from MNF Group Limited (ASX: MNF) and NextCom business from NextCom Pty Ltd.
UNL expects that both transactions would boost its recurring revenue to be at $0.85 million and contribute double-digit earnings growth (EBITDA of $0.3 million) from FY 2020 with a high EPS accretive.
On 4 December 2019, the Company mentioned that it would fund the acquisitions from current cashflows with no requirement of capital raising. The maximum cash consideration is of $0.34 million to be paid over next 15 months.
UNL expects to gain efficiencies across its service provider business with access to cross-selling opportunities for mobile business units.
From the recently released first half year FY 2020 results for the period ended 31 December 2019, the key financial outcomes are as follows:
- Statutory Revenue stood at $7.25 million from $6.7 million, an increase of 8 percent on pcp.
- Statutory NPAT of $2.01 million (which included income tax benefit of $1.66 million) was an increase of 1097 percent pcp from $0.167 million.
- EBITDA for the period stood at $0.68 million.
- At the period end, Cash was at $2.29 million, total assets of $9.27 million and Net tangible assets per ordinary security was 0.60
UNL generated its first operating profit and witnessed an overall growth of its business on the back of three acquisitions including Broadland Group (finalised in October 2019) and Symmetry Networks and NextCom business (in December 2019).
United Networks projects that it would begin to realise the synergies from all the newly acquired businesses in the third quarter of FY 2020 period.
Also, the Company plans for cash investment for making new acquisitions and growth-related activities.
BPP experienced a strong start to 2020
Babylon Pump & Power Limited (ASX: BPP) is a pumping and power generation specialist. BPP provides total solution for diesel engines, specialist equipment rental, diesel rebuild, project support and diesel maintenance.
BPP has two complementary areas to focus, which are as follows.
- Rebuild and maintenance services for diesel driven equipment.
- Rental of power generation equipment and specialty diesel driven pumping.
On 27 February 2020, the Company released its first half year result for the period ended 31 December 2019. The key takeaways from the same were as follows:
- Revenues stood at $7.8 million, with an upsurge of 57 percent on pcp.
- Earnings growth delivered an EBITDA of $1.3 million.
- Reported loss after tax increased by 72 percent on pcp.
- Net tangible assets per ordinary security was noted of 0.0085 cents (as at 31 December 2019) as compared to 0.0038 cents (as at 30 June 2019)
The reasons related to the solid growth of financials were Primepower Queensland acquisition and increased contract wins in its existing operations.
In February 2020, Babylon had secured a largest 3?year contract of $9 million till date with BHP Nickel West.
Outlook: By the end of FY 2020, the Company projects a revenue run rate of $25 million per annuum.
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