Jubilee Metals Group PLC (LON: JLP)

Jubilee Metals Group PLC is an FTSE AIM 100 Index listed United Kingdom-based company focused on the metal recovery business with portfolio projects in South Africa and Zambia. The Company’s various business segments include Metals Processing, Business Development, Exploration and Corporate. The Company’s broad commodity basket consist of Platinum Group Metals (‘PGMs’), chrome, copper, lead, zinc, vanadium and cobalt.

Growth Prospects (also covers H1 FY22 operations update, released on 08 February 2022)

• Settlement of Historical Debt: JLP has settled Zambian and South African historical debt completely. The Company has appointed ACAM to convert all Loan Notes of approximately USD 7.8 million into a contracted conversion price of 2.81 pence per share, representing approximately 7.9% of the enlarged issued capital of the Company.
• Increased Production: The Company had upgraded and fully integrated new Inyoni PGM1 processing facility in South Africa in November 2021. It is expected to produce up to 44,000 PGM ounces and 615,000 tonnes of additional chrome concentrate per annum.

Key Risks 

• Market Risk: Any volatile movement in the market or forex could have a material impact on the operations of the Company.
• Record UK Inflation: The annual rate of UK consumer price inflation reached 5.5% in January 2022, the highest since March 1992. Thus, it can adversely impact the London equities.
• Disruption in Strategic Partnerships: The disruption in partnerships may cause a reduction in the expected benefits and adversely impact the exploration & development activities.
• Commodity Economics: Any significant fluctuation in commodity price and adverse exchange rate movements may reduce the cash flow.

Key Fundamental and Shareholders Statistics of Jubilee Metals Group PLC. 

Slater Investments Ltd. is the most significant shareholder as it holds nearly 271.46 million shares as of 31 December 2021.             

FY21 Financial & Operational Highlights (for the 12 months ended 30 June 2021, as of 02 December 2021)

(Source: Company Filings)

• Solid Jump in Top-Line Business: JLP had shown an increase of around 143% in the total revenue from £54.80 million during FY20 to £133 million for FY21.
• Robust Profitability: The adjusted profit before tax went up by around 324% to £52 million during FY21.
• Balance Sheet: JLP strengthened its balance sheet with total assets increasing by 49% to £195 million at the end of FY21.
  

Financial Ratios (FY21)

Share Price Performance Analysis

(Source: Refinitiv, Research done by Kalkine Group)

On 09 March 2022 at 11:36 AM GMT, JLP’s shares were trading at GBX 15.87, down by around 0.81% against the previous day closing price. Stock 52-week High and Low were GBX 22.00 and GBX 13.30, respectively.

On a daily chart, the stock price is sustained between the lower Bollinger band and the middle Bollinger band. Hence, there could be an uptick in the stock price in the near term. Also, the 14-days RSI stood at ~49.44 levels.

Valuation Methodology: Price/Earnings Approach (FY22E) (Illustrative)

Business Outlook

JLP has shown substantial growth in the top-line revenue and the bottom-line profitability during FY21. The Company’s Project Roan copper concentrator is on the verge of completion, and the commissioning activities will begin soon. Meanwhile, the copper production grew by around 70% to 1,314 tonnes at the Sable refinery in Zambia during H1 FY22. Moreover, the new Inyoni facility reaching full design capacities led to a 66% jump in monthly production during January 2022 when compared with the H1 FY22 levels. Overall, JLP has enhanced production capacity with the completion of world-class, Inyoni chrome and PGM facility in South Africa and Southern Copper Refining Strategy in Zambia.

Please note markets are trading in a highly volatile zone currently due to certain macro-economic and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Considering the strong operational progress, solid liquidity profile, robust FY21 financial performance, and support from the valuation as done using the above method, we have given a “Speculative Buy” recommendation on Jubilee Metals Group PLC at the current price of GBX 15.87 (as of 09 March 2022 at 11:36 AM GMT), with lower-double digit upside potential based on 12.57x Price/NTM Earnings (approx.) on FY22E earnings per share (approx.).

Note 1: The reference data in this report has been partly sourced from REFINITIV.

Note 2: Investment decisions should be made depending on the investors’ appetite for upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and is subject to the factors discussed above.

Note 3: Target Price refers to a price level that the stock is expected to reach as per the relative valuation method and or technical analysis taking into consideration both short-term and long-term scenarios.

Note 4: ‘Kalkine reports are prepared based on the stock prices captured either from the London Stock Exchange (LSE) and or REFINITIV. Typically, both sources (LSE and or REFINITIV) may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.’

Note 5: Dividend Yield may vary as per the stock price movement.  

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and the uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

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