Bear77
a week ago

09-May-2021:  Links to recent Broker Reports:

04-May-2021:  Nova Eye Medical (EYE), Taylor Collison, Update, Outperform

07-May-2021:  OreCorp (ORR), Canaccord, Update, (Spec) BUY

29-Apr-2021:  Skyfii Limited (SKF), Canaccord, Update, BUY

30-Apr-2021:  PainChek (PCK), Canaccord, Update, (Spec) BUY

19-Apr-2021:  Smartpay (SMP), CCZ Statton, Update, BUY

01-Apr-2021:  Calix Ltd (CXL), Canaccord, Update, BUY

14-Apr-2021:  Aerometrex (AMX), Taylor Collison, Update, Outperform

14-Apr-2021:  Skyfii Limited (SKF), Canaccord, Update, BUY

16-Apr-2021:  Viva Leisure (VVA), Moelis Australia, Initiation, BUY

07-Apr-2021:  Artemis Resources (ARV), Taylor Collison, Update, (Spec) BUY

16-Mar-2021:  Capral Limited (CAA), Taylor Collison, Update, Outperform

25-Mar-2021:  RPMGlobal (RUL), CCZ Statton, Initiation, BUY

24-Mar-2021:  Aspen Group (APZ), Taylor Collison, Update, Outperform

18-Mar-2021:  5G Networks Limited (5GN), Wilsons, Update, Overweight

Warning:  These are from brokers who are sometimes service providers to the companies they are covering.  Often when they are bullish on a company you will find the broker has recently done a CR (capital raising, placement) for that company or were involved in the IPO, or the analyst(s) is/are shareholders.  This info is often included in the smallprint in these reports.  Always do your own research (DYOR) and remember that these reports simply reflect the views of the authors (analysts), and they could be wrong.

Disclosure:  Of the companies who have links to broker reports listed above, I hold none of them, and I only have RUL (RPMGlobal) as a small position in my Strawman.com virtual portfolio.  Of the companies who have links to broker reports listed below, I hold all of them, and they are all also in my Strawman.com virtual portfolio.

27-Apr-2021:  Canaccord Genuity: Genex Power (GNX): "Sole survivor - the last ASX-listed, Australia-focused renewable player"  CG have upgraded GNX from a Spec Buy to a Buy and have maintained their $0.36/share PT (price target).

20-Apr-2021:  Ord Minnett: Genex Power (GNX): "Financial close finally in sight" (Buy, $0.29 PT)

18-Apr-2021:  Morgans: Genex Power (GNX): "Coffee is for closers so come get a cup"  Morgans have upgraded GNX from a Spec Buy to "Add" with a $0.34 PT.

23-Mar-2021:  Euroz Hartleys: Research Note: Genex Power (GNX), Buy, $0.35 PT

Note:  To give those reports some context, on April 29th (after all three of those reports on GNX were published), Genex announced that at their 29-Apr-2021 EGM the $25M investment by J-POWER (their Japanese cornerstone investor) for K2-Hydro had been approved and that the agreement between Genex Power & J-POWER was now unconditional, and that Financial Close for K2-Hydro was scheduled to occur on 19 May 2021.   They had previously announced Project Document Contractual Close (on 31-Mar-2021), Finance Document Contractual Close (on 15-Apr-2021), and the start of construction (on 28-Apr-2021). 

GNX has a portfolio of renewable energy generation assets all on the east coast of Australia, including two solar farms that are already operational and producing electricity, and their K2-Hydro pumped storage hydroelectricity (PSH) project is now proceeding.  They also have a large-scale battery project and a wind farm that they are going to construct, as well as a much larger solar farm at Kidston in Far-North Queensland that is going to provide electricity to be stored using their K2-Hydro PSH project.  A very exciting company in my view and I'm a happy shareholder - having bought in at an average price of 20.5 cents/share, only half a cent higher than their recent capital raising price.  It was pleasing to see that Genex have managed to secure funding to allow them to own 100% of K2-Hydro, rather than take on a partner (form a JV) as they had previously indicated they might do - which would have dilluted the upside of the project for existing GNX shareholders.  They have the Queensland and the Australian Federal Governments both on board with this project, they have Japanese clean energy company J-POWER as cornerstone investors (in Genex the company rather than in the K2-Hydro project specifically) and they have managed to secure K2-Hydro funding without having to sell a stake in the project to anybody else.  That's a big tick for GNX's management in my opinion.

16-Mar-2021:  Shaw and Partners: SRG Global (SRG): Rating: Buy, Risk: High, Price Target: $0.70

15-Apr-2021:  Canaccord Genuity: Ramelius Resources (RMS): "A horse worth backing" (Buy, PT: $2.00)

[I hold RMS, SRG & GNX]

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Chalky1610
a week ago

Nice work Bear, valued information that is well appreciated both for content but more importantly, quality and the work put into publishing this valued post. 

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Bear77
a week ago

Thanks Chalky for the positive feedback.  I also appreciate your input and content here, although I'm not personally interested in many of the companies you are posting on (like PointsBet, Dominos, AFG, etc.), so I do tend to skip over those posts and straws, but I do read (and often upvote) the ones I am interested in (like Nuix, CLDD, Redbubble).  

Just as a side note, I can not add images to forum posts - however, for those who are interested in broker views on Appen (APX) - which I do not hold - I've just posted a straw on them here: https://strawman.com/reports/APX/Bear77?view-straw=10645

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Bear77
3 weeks ago

29:Apr-2021:  Conviction Calls

Through its regular updates on engineers and contractors on the ASX, Bell Potter has communicated its three favourites ("key picks") from the sector:

GR Engineering Services (GNG); its exposure to junior and mid-tier miners is expected to support record levels of activity in FY21 and FY22

Lycopodium (LYL); heavily leveraged to re-opening on the African continent, expected to return to growth in FY22

Monadelphous (MND); higher commodity prices are expected to result in higher spending by producers and explorers and Monadelphous will be one of key beneficiaries

Also, sector analysts at Goldman Sachs have returned from a recent trip to Perth with increased confidence the outlook is improving for diversified contractors, drillers, and other providers of services to miners and energy companies.

Goldman Sachs has currently Buy ratings on ALS Ltd (ALQ), Emeco Holdings (EHL), Worley (WOR)and Orica (ORI).

I agree with BP, as I hold GNG, LYL and MND.

I do not hold any of the companies that Goldman Sachs is keen on however.  I reckon Bell Potter have a far better handle on resources companies and mining and engineering services companies than Goldman Sachs do.  Or perhaps BP just think more like I do, and GS do not.  Confirmation bias perhaps...

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Grizzly
3 weeks ago

Mining services seems to be surprisingly on the nose at the moment.  I bought a lot of different mining services during the 2015/2016 mining bust.  The ones that survived came back very strongly.  

I've only got one left which is down a third from its January 2021 highs, but just had a quick look at some others I used to hold and they all seem to be off.

Seems counterintuitive to generally high commodity prices and governments around the world building things to spend their way out of their covid recession.   

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Bear77
3 weeks ago

You're right Grizzly.  I still own a bunch of them, and I'm up on most of them despite them being disliked by the majority of the market at this point.  One I'm looking at getting back into currently is MACA (MLD) who have come down a long way just on sector sentiment.  I already own Macmahon (MAH) and NRW Holdings (NWH) and those three (MAH, NWH & MLD) look like the best risk/reward trade-offs in mining services on the ASX for my money at this point.  I also like a number of engineering services companies, like LYL, GNG & SRG, and of course the big one, Monadelphous Group (MND), one of my all-time favourite companies, although Mono's is now more of a construction and labour hire and multi-service company.  Lycopodium (LYL) was actually originally MND's engineering division which they spun out years ago.  They're now back together via a JV called Mondium which is 60% owned by MND and 40% owned by LYL.  

In the case of MLD and MAH, the majority of their clients are gold miners and it is possible that the recent negative sentiment that saw gold miners' share prices fall a fair way has also affected MLD and MAH for much the same reason.  However, a number of gold miners seem to have bottomed (on 8-March-2021) and are starting to head north again now, but we have not seen that same move in the charts of MLD and MAH.  They will head north again, but I don't know when.

Although they both do other stuff, GNG & LYL both specialise in designing and building gold processing plants, but their share prices seem to move independently from the gold price and sentiment around gold miners.  LYL has had a really good 6 months, and GNG has had a brilliant 12 months.  I was underwater on GNG last year, but I'm well up on them now.  With both LYL and GNG it's all about their order book, and the share prices tend to reflect how much work they've got on their books.  Last year GR Engineering (GNG) didn't have a whole lot of work, and they were sold down accordingly, which is when you load up on such companies.  The thing about GNG, despite being a microcap and being illiquid at times, is that they always maintain a net cash balance, and NEVER have net debt.  Their management ALL own GNG shares, and they are very conservative with their accounting, their capital management decisions, and their guidance to the market.  A company like that, particularly a company that has zero debt, is NOT going broke.  They might go through some lean years, but they always come roaring back when the work picks up again.  You can trade in and out of such companies, buy low, sell high, or do as I do and maintain a core position and trade around the edges of that position.  MND can be categorised the same way.  They can have debt sometimes, but they always pay it off.  They USUALLY have a mountain of net cash, as they do now.  And they are a LOT bigger.  And they also have management with serious skin in the game who are likewise very conservative in exactly the same ways - accounting, capital management (including M&A) and guidance.  Lean years?  Sure.  Comes with the territory - contracting - lumpy revenue, it's going to happen.  But will they be around in 10 years or 20 years from now.  Bet your ass they will.  And they'll be trading at significantly higher share prices also. (in my opinion, DYOR, of course.)

By the way, when I added the forum post two posts up last night, I had searched the forums for "Broker Reports", because that's what I wanted to talk about, and this forum came up with that very title, so I posted in it.  It was only today that I realised that this forum, while indeed called "Broker Reports", is actually under Appen (APX), rather than being in the general forum section where I thought it was located.  So - in light of that - sorry to all you Appen fans who have NO interest in all of this other stuff we are discussing.  Hope your scrolling finger isn't too sore...

 

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Grizzly
3 weeks ago

Ahh yes, for me this just came up as Forum Topics > Broker Reports.  Apologies to the scrollers. :) 

NWH is the one I still have a sizable chunk in, well less now than it's January highs, but I did manage to take a few chips off the table at $3.  I used to hold MAH, bought it cheap enough to do fine out of it, but it never seemed to take off like some of the others.  

For me mining services is only a cyclical play, I don't actually want to hold them all the way through the cycles.  My plan is to buy the better ones when commodity prices are way down, and their share prices have collapsed.  When everybody "knows" that all mining companies are going bust and mining will never be up ever again.  Basically late 2015, early 2016.  Such capitulation is rare but very profitable.      

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Bear77
2 weeks ago

Yeah, I did buy 30,000 MLD (MACA) @ 94 cps today in one of my RL portfolios.  I didn't get the day's lowest price - they closed at 92 cps and traded as low as 91 cps at one stage and as high as 96 cps at the open - however I believe I paid a good price.  What usually happens is they go lower after I buy them, just to test my nerve and conviction, and then turn around and head north at some point, usually weeks or months later (sometimes years).  Meanwhile, they do paid a nice dividend yield to be going on with.

I also increased my exposure to MLD on my Strawman.com scorecard today, to bring it more in line with my MAH (Macmahon) position.  Having only $100K as starting money here and wanting to hold quite a number of stocks in my virtual portfolio, my positions tend to be a lot smaller here in the virtual world than they do in RL.  However, I also own a couple of stocks - like Codan (CDA) - that are not in my Strawman.com portfolio, and there are a number of companies in my Strawman.com portfolio that I do NOT hold in RL, so it's not really a good indicator of what I hold - it's more of an indicator of what I think looks like good value at any given time - the larger the weighting the better the risk/reward equation looks to me.  Riskier companies tend to be the smaller positions.

NWH is one of my favourtie companies @Grizzly.  Thing is they very nearly DID go bust back in 2015 - due to very high debt and not enough work, plus shrinking margins.  They are a LOT better managed these days, and I'm very comfortable that they won't make those mistakes again - particularly the debt thing.  They do use debt for acquisitions now, but they usually do a debt/equity funding mix which is sensible and they pay the debt down reasonably quickly.  They also keep their gearing at sensible levels when they do have debt.  They have made some very smart purchases in recent years, with Golding, the RCR Mining Technologies and RCR Heat Treatment businesses (for next to nothing from the RCR administrators/liquidators) and Primero being the standouts.  All earnings accretive, and all have propelled NRW to another level and given them a wider/larger addressable market.  You would have had to have had nerves of steel however to have held NRW (NWH) from their $4.15/share peak in March 2012 down to 5 cents/share at the end of 2015.  That was 4 years of relentless south east SP trajectory and very little positive news.  For those who bought near that 5 cps low, they then rose for 4 straight years to peak at $3.23 in December 2019.  It's been choppy since then, mostly due to Covid in 2020, but now due to mining services being an unloved sector at this point.  Anyway, I now see NWH as a long term hold.  They will continue to increase their dividends, albeit from a low base, and they are now a $900m company, and they were a $1.25 billion company just 4 months ago in early January, and nothing has changed between then and now except market sentiment.  I agree that the quality names (with the best management teams) in this space are great opportunities when they are absolutely smashed, given up for dead, and nobody wants to touch them.  The good ones always come back.  As you say @Grizzly, it can be a very profitable exercise when the opportunity presents.

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Chalky1610
4 weeks ago

The attention to detail and the level of work you put in to providing information to people is significant, Not only am I impressed but I do sincerely so thank you.  I take my hat off to you.

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Chalky1610
4 weeks ago

Dear Ninfy ol boy, for what it is worth, lastest broker reported on matters associated with Appen is as following:

As of Friday gone, Citi has made a bold call on Friday, rating the Appen share price as a buy with a $30.90 target price. This represents an upside of approximately 82% from its current level of $16.97. 

hope this helps 

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