What’s New With These ASX Players – Speedcast International, Pilbara Minerals, Galaxy Resources

  • Nov 06, 2019 AEDT
  • Team Kalkine
What’s New With These ASX Players – Speedcast International, Pilbara Minerals, Galaxy Resources

The benchmark index S&P/ASX 200 was trading at 6,690.9 points on 6th November 2019 (AEST 12:39 PM), down 0.09%. In the below article, we are discussing three stocks, one from communication services sector and the other two from metals & mining sector. Let us have a look at the recent developments of these ASX listed stocks.

Speedcast International Limited (ASX: SDA)

SDA, listed on the Australian Securities Exchange in 2014, is involved into the provisioning of remote communications. The company also caters to its global clients with IT services.

Negative Outlook
  • The company, through a release dated 5th November 2019, advised the market that its issuer credit rating has been lowered by S&P Global to B- from B. S&P Global maintained its outlook as Negative.
  • As earlier disclosed, the company does not have a rating, which is covenant in its debt facilities. It added that the change in ratings has no direct impact on funding costs.
  • The company continues to seek a number of operational initiatives for improving its cost profile, working capital as well as cash flow performance. It also continues to pursue other initiatives to improve the financial position of the group.

New Appointments and Change in Substantial Holdings

  • Speedcast recently announced that Norges Bank became an initial substantial holder in the company on 1st November 2019 with a voting power of 5.64%.
  • In another update, the company announced to have appointed Peter Myers, bringing a wealth of substantial operational finance experience from several companies and industries, as Chief Financial Officer, effective from 4th November 2019.
  • The company also appointed Jennifer Grigel as Chief Operating Officer, who will start with SDA in early 2020.

Financial Statistics

  • For the half-year ended 30th June 2019, the company reported group revenue amounting to $357.6 million, representing a rise of 17.3% year-on-year.
  • Speedcast’s half-year (1H FY19) operating cash flow stood at $23.9 million with cash conversion of 36% of underlying EBITDA, owing to working capital deterioration as well as non-recurring expense.

At the end of 2019, the company would continue to target Leverage Ratio to be below 4.0x.

The stock of SDA was trading at $0.907 per share on 6th November 2019 (AEST 12:39 PM), down 2.473% from the previous closing price. The stock made a high and low of $4.150 and $0.682 during the last 52 weeks, respectively. The stock generated a return of -46.09% and -75.78% during the last three-month and six-month period, respectively. The market capitalisation of the company stood at $222.96 million.

Pilbara Minerals Limited (ASX: PLS)

Pilbara Minerals Limited (ASX: PLS) is engaged into exploration, development and operation of the Pilgangoora Lithium-Tantalum Project.

September Quarter Highlights

At the end of October 2019, PLS released operational and financial performance for the September 2019 quarter, wherein the key personnel of the company stated that June and the entire September 2019 quarter proved as challenging for Pilbara Minerals as well as for the global lithium raw materials sector. However, PLS responded towards these short-term market challenges quickly and decisively.

According to the company, production during the three months to September was moderated, owing to soft market conditions and the slower-than-expected ramp-up of China-based facilities by the offtake partners of PLS.

There were two major highlights during the quarter. The first one was the signing of binding terms (Joint Venture) with POSCO in pursuant to the construction and design of a downstream chemical conversion facility in South Korea and the second one was the introduction of CATL as a strategic investor in the company.

PLS announced an equity raising of $111.5 million, which comprised:

  • $55.0 million strategic placement to CATL, which is a leading EV battery manufacturer of China.
  • $36.5 million underwritten institutional placement, and
  • Equity raising amounting to $20.0 million from Share Purchase Plan.

Cash balance at the end of the quarter was $60.9 million.

Chairman’s Address

At the Annual General Meeting of the company, Chairman Tony Kiernan addressed the shareholders and stated that proceeds from equity raising and associated share purchase plan, if fully concluded, would raise a total of ~ $110 million, enabling PLS to progress its long-term growth as well as diversification strategy.

  • The company will primarily utilise the proceeds to strengthen the balance sheet and to boost working capital and financial liquidity during the previously announced period of moderated production.
  • The proceeds would also be directed towards the continuing Stage 2 expansion studies in order to incrementally expand the Pilgangoora Lithium-Tantalum Project in accordance with customer requirements.

The stock of PLS was trading at $0.340 per share on 6th November 2019 (AEST 12:40 PM), down 2.857% from its previous closing price. The stock made a high and low of $0.885 and $0.270 during the last 52 weeks, respectively. The stock generated a return of -23.08% and -52.05% during the last three-month and six-month period, respectively.

Galaxy Resources Limited

Galaxy Resources Limited (ASX: GXY) is engaged in the production of lithium concentrate as well as exploration for minerals in Canada, Argentina and Australia. The company recently announced that John Turner, one of its directors, acquired 50,000 ordinary shares on 28th October 2019 at a consideration of $42,142, which led to a change in his holdings in GXY.

Q319 Report

The company, through a release dated 24th October 2019, updated the market with its activities during the quarter ended 30 September 2019.

  • Production volume at the Mt Cattlin mine stood at 50,014 dmt of lithium concentrate, which was grading at 6.0% Li2O, and reached the midpoint of production guidance range of 45,000 – 55,000 dmt;
  • Mt Cattlin production unit cash cost amounted to US$387 per dmt produced free-on-board, aiding the position of Mt Cattlin as one of the low-cost lithium concentrate operations worldwide;
  • During the quarter, the company executed an agreement with a consortium of lenders for acquisition of the senior secured loan facility, which have been provided to Alita Resources Limited;
  • In addition, GXY continued to assess restructuring options which are related to Alita and Bald Hill;
  • At the end of the September 2019 quarter, the company had US$169 million in cash and US$32 million in debt.

Outlook

  • For the last quarter of 2019, the company is targeting lithium concentrate production volume of 35,000 – 45,000 dmt;
  • For the full year 2019, GXY is expecting production of 183,000 – 193,000 dmt;
  • Target shipment volumes for the December 2019 quarter are 30,000 – 40,000 dmt.

The stock of GXY was trading at $1.060 on 6th November 2019 (AEST 12:40 PM), up 3.922% from its previous closing price. The stock made a high and low of $2.850 and $0.815 during the last 52 weeks, respectively. The stock generated a return of -15% and -32.89% during the last three-month and six-month period, respectively.


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