27-Aug-2021:  Click here to watch Luke "Wini" Winchester from Merewether Capital talking on Ausbiz on Friday (27-Aug-2021) about the recent (24th Aug) full year results from XRF Scientific (from the 3:30 mark of the video), Kip McGrath Education and Austco Healthcare.  Wini was the Emerging Companies Portfolio Manager at Oracle Investment Management (and might still be according to his LinkedIn profile), and is now the CIO of Newcastle-based Merewether Capital, which ARC have just bought 40% of.  Luke discloses that he owns all three of those companies (XRF, KME and AHC) and he's bullish on them clearly, and when Wini is bullish on a company it's worth noting!

Disclosure:  I do not hold any of those companies in RL, but XRF is in my SM portfolio (and ARC is on my watchlist).

05-Mar-2021:  CCZ Equities Research: XRF Scientific (XRF): Stronger testing volumes expected in the 2nd half

Analyst:  Daniel Ireland, [email protected], +61 2 9238 8239

• Recommendation: BUY
• Target Price: 37cps (down from 39cps)
• Market Capitalization: $37.5m
• Index: None
• Share Price: 28cps (29.5cps on 12-Mar-2021)
• Sector: Industrials

Stronger testing volumes expected in the 2nd half

• Performance weighted to 2 nd half:  XRF reported HY21 revenue of $14.9M ($15.7M pcp, -5.3%%) and -12.8% below CCZ forecasts whilst PBT was $2.2M adjusted for JobKeeper (-5% vs pcp). Growth was slower than anticipated due to COVID19 shutdowns in Europe and Canada whilst reordering patterns for flux materials, a critical component in base metals testing and a significant contributor to profit, is expected to be weighted to the 3 rd and 4th quarters. The company continues to develop new machines, with the release of such products expected shortly and a natural extension of the companies long standing diversification strategy away from resources.
• Platinum Division continues diversification:  The company has not provided guidance for FY21, however testing materials will inevitably increase in conjunction with a strong mining and minerals market. It is expected that laboratories will require x-ray flux materials driven by a surge in mining refit capex. The German office experienced a positive result for the half, profitable for 4 months - achieved via careful cost management and increased service and product margins. With a strong presence in platinum products, the success of this office provides a significant opportunity to diversify the company toward industrial customers with an immediate addressable market of €100M.
• Forecast marginally changed:  FY21E revenue expectations have been increased to $31.3M from $30.6M, Fy21E EBITDA expectations have increased from $6.6M to $6.7M and Fy21 EPS has been maintained at 2.8cps. Based on the HY21 results we have adjusted revenue for Consumables to $9.5M (7% growth vs Fy20), Precious metals to $13.6M (+7% growth vs Fy20) and Capital Equipment to $8.2M (10% growth vs Fy20). Expectations are for XRF to pay a full year dividend of 1.8cps (+28.5% vs pcp) fully franked, largely due to an improvement in operating cashflow and a large franking credit balance.
• Investment thesis - Unchanged:  We have reduced our valuation to $0.37 per share. With moderate growth expected from all divisions, XRF is positioned to benefit from the capex refresh cycle taking place in the mining industry. As budgets increase in the industry, XRF is well positioned with new product developments close to commercialisation, a growing customer base and a shift toward industrials customers in cement, aerospace and high-end manufacturing industries.

--- click on the link at the top for the full CCZ report on XRF ---

[I have held XRF shares previously, and they are still on my Strawman.com scorecard.]

21-July-2020:  CCZ Equities Research:  XRF Scientific (XRF): Niche manufacturer with global potential

CCZ has a "Buy" call on XRF and a TP (target price) of 31 cps (cents per share).

Excerpt:

• Initiating Coverage: XRF Scientific (XRF) is a niche manufacturer and marketer of equipment, chemicals and instruments within the X-ray Fluorescence testing supply chain, an essential testing process used to determine the chemical composition of mineral assays for Australia’s resource exports. XRF’s products create samples used for testing of minerals when drilling, during production and before export.
• Significant earnings growth that is protected from COVID-19: Strong profit growth forecast in FY20 (circa 36% statutory & 17% underlying) as demand ramps up for XRF’s flux and precious metals products. Third quarter results to March were strong with PBT up 40%, and with base metals and iron prices increasing since March, XRF will benefit from higher demand for testing services. With a dominant market position, we believe the short-term earnings trajectory remains well protected from the effects of COVID-19.
• Precious Metals (PM) Division poised to rerate: This division deserves to trade at a material premium to the consumables and equipment divisions. Although the German office demonstrated organic revenue growth of 45% over HY20, the earnings potential of this division is not factored into the current share price. The appointment of two highly experienced sales directors to PM from a global competitor, Heraeus (a major platinum manufacturer), will support strong revenue growth as the German sales office crosses an inflection point and executes earnings growth after an extended period of capital expenditure.
• Excess franking credits: XRF held $5.7m in excess franking credits at FY19 end, and this will increase in FY20. Management have indicated they are considering options to distribute excess franking credits back to shareholders.
• Investment summary: We initiate coverage with a blended valuation of $0.31. With a strong trading update expected for FY20 and well protected from COVID-19, XRF’s long-term global growth opportunity and valuation makes this stock a highly attractive investment at the current share price.

--- click on link at the top for the full report ---

17-Apr-2020:  XRF Scientific March 2020 Quarterly Trading Report

Market like!  XRF were up to as high as 22 cps (+33%) earlier today, and they're still up at 19.5 cps (up 3c or +18.2%) on the back of this report.  They had peaked at 26.5c on Feb 21, then dropped -47% in 4 weeks to close at 14c on March 24.  So far, they've climbed about half way back up.