Jubilee Metals Group Plc

Jubilee Metals Group Plc (LON: JLP) is a UK-based diversified metals development Company. The Company focuses on reprocessing of historical surface mine waste and materials with an aim to obtain long-term, low-capital intensive, low-risk commodity output from waste materials of mine surface.

Investment Highlights - Jubilee Metals Group Plc – Expensive at GBX 16.01

• Despite the solid financial performance in H1 FY2021, the Company expects trading environment to remain uncertain in near-term.
• In the last one month, the Company delivered a negative return of ~2.23% and delivered lower returns compared to the benchmark Index (FTSE-AIM Index).
• As per valuation metrics, Price/ Earnings multiple of the Jubilee Metals Group Plc is currently higher as compared to the corresponding multiple of the Metals & Mining industry, reflecting overstretched valuations.
• From the technical standpoint, 14-day RSI is supporting downward movement (around 52 level), which means the stock price could decline in the short term.

Key Risks

• The Company has an overall risk of Covid-19 uncertainties which may cause a significant delay in various development projects.
• Lower commodity prices and oversupply of the resources in the market can severely affect the business.

Financial Highlights – H1 FY2021 (31 December 2020) (released on 25 March 2021)

(Source: Interim Report, Company Website) 

• In the first half of the financial year 2021, driven by higher revenue from PGM and Chrome, the revenue increased by 110%.
• Driven by increased metal prices and increased operational output, the profitability for the period increased. The Company reported profit for the period of £19,259 thousand in H1 FY2021.
• The cash flow from operations (before movements in working capital) surged significantly by 265%.
• The cash balance as on 31 December 2020 stood at £9.8 million.

One Year Share Price Chart

(Source: Refinitiv, Thomson Reuters)

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

Conclusion

The Company has shown a significant increase in financial performance in the first half of the financial year 2021. Both revenue and profitability margins for the period increased. Jubilee Metals Group is committed to achieve target of 25000 tonnes of copper production per year in next 4 years. The Company expects to deliver strong growth in the second half of the financial year 2021, while trading environment is full of challenges related to the covid-19 pandemic. Presently, the company is trading near a 52-week high, raising doubts at its upside potential at current prices. The stock made a 52-week low and high of GBX 2.50 and GBX 17.29, respectively.

Based on the above rationale, we have given an “Expensive” recommendation on Jubilee Metals Group Plc at the current price of GBX 16.01 (as on 15 April 2021 at 12:35 PM GMT), and with support from few catalysts needs to be evaluated at a later stage such available working capital credit facility with ABSA Bank to support growth.

Tandem Group Plc

Tandem Group Plc (LON: TND) is an AIM-listed holding Company. The Company is engaged in the business of designing, developing, sourcing and distribution of equipment related to sports, leisure and mobility. 

Investment Highlights - Tandem Group Plc – Expensive at GBX 696.00

• Despite the encouraging start to the financial year 2021, the Company’s operational performance in impacted by the uncertainties related to the covid-19 pandemic.
• As per valuation metrics, EV/EBITDA, Price/ Earnings and Price/Cash Flow multiples of the Tandem Group Plc are currently higher as compared to the corresponding multiples of the Leisure Products industry, reflecting overstretched valuations.
• From the technical standpoint, 14-day RSI is supporting downward movement (around 75 level), which means the stock price could decline in the short term.

Key Risks

• The inability to the produce right volume of products at the right time amid global uncertainties and tough operating environment can impact the growth trajectory.
• The heavy reliance over online channels is also imposing risk associated with information technology aspects and cyber-attacks.

Financial Highlights – FY2020 (31 December 2020) (released on 25 March 2021)

(Source: Annual Report, Company Website) 

• For the financial year 2020, due to stock availability and ongoing cautious national retailer FOB buying, the revenue declined by 4.6%.
• Driven by lower cost of sales and lower operating expenses, the profitability for the period improved. The Company reported a higher net profit of £3,458 thousand in FY2020 (FY2019: £2,034 thousand).
• The Company’s cash balance as on 31 December 2020 increased to £16,608 thousand (31 December 2019: £14,311 thousand), with an increase in net assets and net cash.

One Year Share Price Chart

(Source: Refinitiv, Thomson Reuters)

Conclusion

The Company has shown an increase in financial performance in the financial year 2020. Despite the lower revenue, the bottom-line performance improved, with higher profitability margins. Tandem Group is optimistic for outlook in FY2021 and made an encouraging start to new financial year. Despite the improved performance, the Company’s business in impacted by travel restrictions and issues in the supply chain due to the impact of the covid-19 pandemic. The Company is also facing issues in identifying new product sources. Presently, the company is trading near a 52-week high, raising doubts at its upside potential at current prices. The stock made a 52-week low and high of GBX 123.91 and GBX 725.00, respectively.

Based on the above rationale, we have given an “Expensive” recommendation on Tandem Group Plc at the current price of GBX 696.00 (as on 15 April 2021 at 9:55 AM GMT), and with support from few catalysts needs to be evaluated at a later stage such improvement in freight issues.

*Dividend Yield may vary as per the stock price movement.

*All forecasted figures and Peer information have been taken from Refinitiv, Thomson Reuters.

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