- Small-cap stocks are amongst the most sought-after by investors with a high-risk appetite.
- For Mt Alexander Project (Western Areas Limited has a 25% skate in the project), the preliminary metallurgical test work confirmed the remarkable metallurgical recoveries and concentrate grades of Cu, Ni and Ag.
- Agricultural chemicals player Nufarm expects to recognise non-cash, impairment charges regarding its European assets of ~A$215 million.
- CLINUVEL confirmed that its drug SCENESSE® could protect skin from UV light and can repair DNA damage.
- Whitehaven Coal highlighted that considerable contraction in the coal prices impacted its headline financial results.
Small-cap stocks are amongst the most sought-after investments by those investors with higher risk appetite. Generally, small-cap stocks have a market cap in the range of A$300 million to A$2 billion and provide an opportunity to beat other institutional investors as they have substantial growth opportunities. Although small-cap stocks are highly volatile and a risky investment, the fact that small-cap stocks have outperformed large-cap stocks on several occasions cannot be ignored either.
Market players interested in small-cap stocks tend to focus on a company’s business model, the management, the markets the Company is catering, and the existing competition, among others. The direction in which a business is headed plays a significant role in an investor’s decision.
In this article, we would look at some of the small-cap companies and cover their recent updates.
Western Areas Limited (ASX:WSA)
Western Areas Limited is a leading nickel producer in Australia with two of the highest-grade nickel mines.
On 14 September 2020, Western Australian nickel company St George Mining Limited (ASX:SGQ) updated on the excellent results from the metallurgical test work on nickel-copper sulphide mineralisation from Mt Alexander Project.
Mt Alexander Project is a flagship project of St George Mining Limited. This project is a joint venture between Western Areas Limited (25% stake) and St George Mining Limited (75% stake).
St George Mining Limited confirmed that Strategic Metallurgy Pty Ltd had completed the preliminary metallurgical test work in Perth. The test resulted in outstanding metallurgical recoveries and concentrate grades for massive and dispersed nickel-copper sulphides from the Investigators Prospect.
Below is the Result:
- Nickel Mines Fasttrack Debt Repayment Over Recovery in Base Metals Prices
- Copper Miners Ballooning on Exchange as Copper Surge Lifts Market Sentiments
Nufarm Limited (ASX:NUF)
Nufarm is a trusted global partner behind various agricultural triumph. The Company is engaged in finding more efficient means to fight diseases, weeds, and pests to safeguard and improve crop yields. At present, Nufarm is amongst leading developers and manufacturers of crop protection solutions and seed technologies.
The Company recently came up with two announcements.
On 14 September 2020, Nufarm announced the resignation of its Chief Financial Officer Paul Binfield. Paul resigned to pursue the next step in his career and would be serving the Company till 31 December 2020.
Non-Cash Asset Impairment and Preliminary, Unaudited FY2020 Earnings Estimate:
Nufarm has updated on a review of the carrying value of its assets as per the relevant accounting standards. Depending on finalisation of the audit, NUF expects to recognise non-cash, impairment charges concerning its European assets of ~ A$215 million in financial statements for the year ended 31 July 2020.
The assessment of the carrying value considers the latest operating performance plus a moderate outlook of future earnings based on an anticipation of ongoing margin pressure in NUF’s base product portfolio because of the improved manufacturing costs coupled with increased competition.
Based on the preliminary, unaudited accounts, the Company expects its underlying EBITDA for FY2020 to range from A$290 million to A$300 million. Post the sale of South American businesses, the underlying EBITDA from the continuing operations lie in the range A$230 million - A$240 million.
Further, in 2H FY2020, Nufarm delivered positive momentum across most regions. At the same time, the Company stated that its earnings would be down as compared to the previous year because of the divestment of the South American businesses, reduced earnings in the initial half, and lower earnings in Europe.
CLINUVEL PHARMACEUTICALS LTD (ASX:CUV)
CLINUVEL PHARMACEUTICALS, is involved in creating and providing treatments for patients suffering from severe genetic, skin, and systemic disorders.
On 10 September 2020, the Company announced its progress towards the development of drug SCENESSE® that is used for treating xeroderma pigmentosum (XP). This program is aimed to ensure the ability of SCENESSE® drug to regenerate DNA of skin exposed to UV rays.
Through this program, it was confirmed that SCENESSE® is capable of protecting skin from light (photoprotection) and can repair DNA damage.
Vocus Group Limited (ASX:VOC)
Vocus Group Limited is offers telecommunications services across Australia and NZ. In a three-year turnaround, the Company has progressed strongly. Its Vocus Network Services has established as the core growth engine with EBITDA over 10%.
Vocus, at present, is well placed to capitalise on accelerating market trends. Australian Retail Consumer Business stabilising with growth in NBN margins. Its New Zealand business has delivered a fifth consecutive year of organic EBITDA growth.
FY2020 Highlights at a Glance:
- Vocus established three business unit on a solid platform for growth.
- A system overhead reduction supported the Company to sustain EBITDA during the transition of AU retail.
- Vocus continues to invest in growth and simultaneously working to modernise its infrastructure.
Click here to know the positive business announcements by the Company.
Whitehaven Coal Limited (ASX:WHC)
Whitehaven Coal Limited is Australia’s leading premium-quality coal producer. During FY2020, the reduced coal prices impacted the company earnings. However, the Company reported the lowest ever total recordable injury frequency rate of 4.13 during the period.
The Company highlighted that considerable contraction in the coal prices impacted its headline financial results disproportionately. Despite this, Whitehaven was able to provide its investors A$312 million in dividends through the period.
WHC’s recent approval of Vickery was a significant achievement for the Company. However, in the present short-term economic uncertainty, the Company is cautious about its expansion and capital allocation.
At present, WHC’s immediate focus is to achieve greater efficiency and more reliable operational performance until there are markets rebalancing and price improvements.