Stocks Under the Spotlight - SXY, CRN, MND, PET, NCZ

  • May 28, 2020 AEST
  • Team Kalkine
Stocks Under the Spotlight - SXY, CRN, MND, PET, NCZ

Summary

  • Senex Energy upgraded FY20 production and EBITDA guidance, on the back of underlying strength of its transformed east coast natural gas business
  • With FY20 key focus on the new Curragh mine plan implementation, Coronado Global Resources targeting to boost the mine’s saleable production to 15 Mt by 2023
  • Monadelphous Group experiencing COVID-19 operational impacts; however, remains well positioned to deal with the challenges ahead, and the opportunities arising
  • Backed by unique product and increasing global need for clean water, Phoslock Environmental expects a secure long-term sales position
  • New Century eyeing the status of major supplier of nickel and non-DRC sourced cobalt with the acquisition of Goro operations

After witnessing its best session on Tuesday, 26 May, in last seven weeks, and exiting the bear market, Australian share market again fluctuated on Wednesday, 27 May, ending the day in the red zone. However, the market rebounded on 28 May, and the benchmark index S&P/ASX 200 was trading upward by 128.2 points or 2.22% to 5,903.2 as at AEST 11:32 AM on 28 May 2020.

Do Read: Australian Dollar Soaring Amidst the Green shoots of Recovery

Stock markets across the globe have been on a roller coaster ride in the recent past, owing to several factors including market sentiments towards the uncertain environment arising from the virus crisis and escalating tensions between the most prominent economies of the world, US and China. Moreover, ties between China and Australia seem to be getting deteriorated, as the Asian nation got miffed due to Australian urge to probe the origin of novel coronavirus.  

That said, let’s discuss five ASX-listed stocks, covering their recent market updates and stock performance.

Senex Energy Ltd (ASX: SXY)

Australian oil & gas company, Senex Energy Ltd and GLNG have agreed for a short-term re-direction of around 1 PJ of natural gas from Roma North to the Wallumbilla natural gas supply hub over the period of June to August 2020. The reduction in supply volumes follows GLNG’s currently lower LNG offtake needs and material production outperformance at Roma North.   

Robust Natural Gas Production - Surat Basin production at Roma North and Atlas is showing robust performance with current output above 34 TJ/day. SXY would further reduce the number of wells to be drilled to 45 wells from 50 wells at Atlas, owing to continued production and reservoir outperformance. Originally, the Company had planned to drill 60 wells. 

The current drilling campaign is expected to be completed in the coming weeks, with final wells to be brought into production during June 2020.

FY20 Guidance Upgraded - SXY has upgraded its FY20 guidance, with production guidance increased from 1.8-2.0 mmboe to 2.0-2.1 mmboe and EBITDA guidance increased from AUD 40-50 million to AUD 45-55 million. The increase reflects the underlying strength of the Company’s transformed east coast natural gas business and its ability to adapt and grow in the current lower oil price environment.

Managing Director and CEO Ian Davies stated that SXY reached the final investment decision for AUD 400 million capital program in the Surat Basin in October 2018. And, in less than two years, the Company became an essential gas producer for the east coast market, thanks to the transformational Roma North and Atlas natural gas development projects.

SXY was trading at AUD 0.245 on 28 May 2020 (AEST 12:04 PM), up 2.083% from its previous close, with the Company boasting a market cap of AUD 349.73 million. 

Must Read: Resource Stocks Moving Up; Due to Companies’ Steadfast Measure on COVID-19 or Short Covering?

Coronado Global Resources Inc. (ASX: CRN) 

Coronado Global Resources, one of the world’s biggest producers of high-quality metallurgical coal, has announced the resignation of Group Chief Financial Officer Ayten Saridas, who would remain active in the role to support CRN during a period of transition.

FY19 Performance Summary - The Company recently released its annual report for the 12-month period ended 31 December 2019, highlighting development of an accelerated mine expansion plan for Curragh, securing rail and port infrastructure to support the expansion and planned blending operations, expansion of metallurgical coal production, and redesign of the Buchanan mine plan.

 

Source: Company's report

 

During the second half of the previous year, when the volatile commodity environment experienced a collapse in metallurgical coal prices, CRN increased its EBITDA by 5.9% to USD 634.2 million on similar levels of production and sales volume as the previous year. The Company, which returned USD 720 million to shareholders within a short period of being listed on the ASX in October 2018, registered an increase in net income after tax of 80.9% to USD 305.5 million in 2019.

FY20 Key InitiativesFor the financial year 2020 ending 31 December 2020, the Company plans

  • Capital project management to facilitate the Curragh mine expansion
  • At the Curragh plant, boost the metallurgical coal recovery by 5%
  • Using purchase coals and US coals, expand blending operations to drive improved margins
  • Focus on permitting and design work on the Mon Valley

 

The Company targets to increase Curragh’s saleable production to 15 Mt by 2023.

CRN was trading upward by 0.463% to AUD 1.085 on 28 May 2020 (AEST 12:31 PM), with a market cap of AUD 1.04 billion.

Do Read: Needle On 5 Metals And Mining Stocks – CRN RRL AQG SGM SBM

Monadelphous Group Limited (ASX: MND)

In a market update, the engineering company highlighted that the government’s measures to curb the pandemic have impacted the business. Monadelphous is taking steps to manage the business and ensure employees’ safety during these unprecedented times. The engineering construction division has experienced supply chain issues, and maintenance division faced a material reduction in activity levels. 

COVID-19 Business Impacts - Due to the turbulent times, MND has not provided definitive revenue guidance for the financial year ended 30 June 2020. However, MND stated that if the current activity level continues to the end of the fiscal year, revenue will be same as the previous year corresponding period. After a thorough review of the water infrastructure business in Australia and NZ, Monadelphous has decided to discontinue operations in NZ and consolidate operation to a single Australian business unit. It will help in cost reduction during the crisis and let the Company focus on improving earning from the water sector.

Measures - Other than that, the Company has taken several actions to safeguard the business and manage and reduce the expenses to ensure MND operates profitably and productively. The senior management, including Chairman, MD, non-executive directors have all agreed to a 30% cut in their salary and fees for the next six months. Furthermore, executive and general management teams agreed for 10% to 20% reduction in their pay during the same period.

MD Rob Velletri said that Company would keep going during the challenging and uncertain times. MND is well-positioned thanks to its strong balance sheet, loyal workforce, and disciplined and prudent management. The decision of refocusing on water infrastructure business would yield more profit to the Company and offer a sustainable pipeline of opportunities over the long term.

MND was further advancing by 4.953% to trade at AUD 12.290 on 28 May 2020 (AEST 12:42 PM), with the Company boasting a market cap of AUD 1.11 billion.

Phoslock Environmental Technologies Limited (ASX: PET) 

Based in Sydney, global environmental company, PET offers engineering solutions and water treatment products. With operations in the UK, Australia and China, the Company caters towards remediating polluted rivers, drinking water reservoirs, lakes and canals.   

Recently, the Company announced the retirement of Mr Robert Schuitema from the Board after 15 years with PET. Meanwhile, Mr Lachlan McKinnon was appointed as Managing Director/CEO.

According to the Company’s 2020 Annual General Meeting held on 25 May 2020, PET, on the back of its depth strategy and intense planning, intends to turn the crisis into an opportunity and strive to minimise the lost time caused by COVID-19.

Following are the details of the financial performance of PET in FY2019:

  • Revenue: AUD 25.1 million, up 40% YoY
  • NPAT: AUD 2.7 million, compared with a loss of AUD 1.0 million in the year-ago period
  • Strong Operating Margins: 54% Gross Profit Margin
  • Net Cash from operations for 2019: AUD 7.6 million
  • As at 25 May 2020, the Company had AUD 35 million in cash, receivables/inventory of AUD 21 million, net assets of more than AUD 55 million and remained debt free

 

Source: Company's presentation 

PET was trading at AUD 0.545 on 28 May 2020 (AEST 12:46 PM), down 0.005% from its previous closing price, with a market cap of AUD 340.62 million.

Do Read: Brewing tensions between China and Australia: What could be at risk?

New Century Resources Limited (ASX:NCZ)

Mineral exploration and development company, NCZ has entered into a 60-day exclusivity period with Vale Canada Limited (VCL). During the period, the Company intends to finalise due diligence and negotiate a deal concerning the acquisition of Vale Nouvelle-Calédonie S.A.S. (VNC), under which NCZ is seeking 95 per cent of the VNC issued shares.

VNC is the owner and operator of the Goro Nickel & Cobalt Mine in New Caledonia (Goro). The Goro operations include a fully integrated and operational world-class mine, processing plant and port facility.

The financial terms are expected to include a financial package to support the transition and continuity of VNC operations from VCL to NCZ; however, the same is subject to the transaction proceeding, dependent on due diligence and negotiation of formal agreements.

With this deal, New Century Resources is anticipated to become a major supplier of nickel and non-DRC sourced cobalt for the electric vehicle industry.

 

 

NCZ was trading downward by 4.878% to AUD 0/195 (AEST 01:04 PM), with the Company boasting a market cap of AUD 170.2 million.

Interesting Read: 5 Growth Stocks that are Investors’ Favourite during COVID-19

 


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