Metal Tiger Plc

Metal Tiger Plc (LON: MTR) is a financial services Company, which is providing business and financial support to Companies to expand the value of natural resource interest.

Investment Highlights – Metal Tiger Plc – Speculative Buy at GBX 23.22

• In the first half of the financial year 2020, the Company has a strong balance sheet and a decent liquidity profile.
• In the last nine months, the Company delivered a significant return of ~57.38 and delivered higher returns compared to the benchmark Index (FTSE-AlM Index).
• The Company from past five years maintained a current ratio of 12x, reflecting that it has sufficient liquidity to meet short-term obligations.
• From the technical standpoint, shares were trading well above the support level of 20-day simple moving average prices (GBX 21.30), which reflects an uptrend in the stock and can move up further.

Key Risks

• The macro factors continued to impact operational performance adversely and resulted in an increased risk.
• Political uncertainties and macroeconomics headwinds may continue to impact the current business environment and investors sentiments.

Recent News

On 29 January 2021, Metal Tiger announced that it had received ASX’s (Australian Securities Exchange) conditional approval in response to formal admission request to the ASX’s Official List.

Financial Highlights – H1 FY2020 (30 June 2020) (released on 30 September 2020)

(Source: Interim Report, Company Website) 

• In the first half of the financial year 2020, profitability for the period declined, due to net loss on the investment.
• The Company continues to make further investment in existing and new companies to diversify the investment portfolio for further growth.
• The Company was fortunate enough to enter 2020 with a relatively liquid and robust balance sheet.

One Year Share Price Chart

(Source: Refinitiv, chart created by Kalkine Group)

Conclusion

The Company has shown a decline in financial performance in the first half of the financial year 2020. The profitability for the period declined and remained in the negative zone. Despite the lower performance, the Company secured an equity derivative collar financing facility against Sandfire shareholding from a global investment bank, which will further strengthen the financial position. Metal Tiger has received conditional approval for a secondary listing on the ASX (Australian Stock Exchange), which will expand the Company's profile and create improved price discovery in its shares as well as provide access to new potential investors and to improve deal flow in Australia. MTR seems to be well-positioned to continue to deliver the long-term objectives, with an increase in underlying commodity prices. The stock made a 52-week low and high of GBX 7.00 and GBX 29.00, respectively.

Based on decent growth prospects, we have given a "Speculative Buy" recommendation on Metal Tiger Plc at the current price of GBX 23.22 (as on 10 February 2021, before the market close at 1:26 PM GMT).

Filta Group Holdings Plc

Filta Group Holdings Plc (LON: FLTA) is an AIM-listed commercial company, which is a provider of a variety of services to commercial kitchen operators and owners.

Investment Highlights - Filta Group Holdings Plc – Speculative Buy at GBX 102.00

• The Company made encouraging progress in Europe and North America, along with a healthy pipeline.
• In the last one month, the Company delivered a decent return of ~ 15.03% and delivered higher returns compared to the benchmark Index (FTSE-AIM Index).
• Over the course of 3 years (H1 FY17 – H1 FY20), the Company’s revenue surged from GBP 6.59 million in H1 FY2017 to GBP 8.30 million in H1 FY2020, reflecting growth trajectory of ~ 7.99%.
• From the technical standpoint, shares were trading well above the support level of 20-day simple moving average prices (97.40), which reflects an uptrend in the stock and can move up further.

Key Risks

• Government policies of social distancing and lockdown are having a pronounced effect on the Group’s trading.
• The failure of a major franchisee may lead to a loss of revenue and a bad debt.

Trading Update for FY2020 (31 December 2020) (released on 25 January 2021)

• The Company has shown robust performance in H2 FY2020, with increased customer numbers in the summer period.
• In May 2020, the Company launched FiltaShield service, a new revenue line, the Company’s margins improved and achieved Q1 2020 levels.
• In the US and the UK markets, Company witnessed improvement in the performance, despite the lockdown restrictions.
• In Europe, primarily the German business, the activities are significantly impacted by the lockdown, while costs have been minimised to protect the business until the market recovers.

One Year Share Price Chart

(Source: Refinitiv, chart created by Kalkine Group)

Conclusion

Despite the lock-down restrictions and social distancing protocol, the Company has delivered a stronger performance in the second half of the financial year 2020. With the launch of a new revenue line, the Company’s margins returned to Q1 2020 levels. FLTA’s pipeline of new sales looks promising, with encouraging franchise enquiries. The Company expects volumes to increase as the restrictions are lifted. The Company holds a strong financial position and is a market leader in its operating territories. Filta Group Holdings is confident of emerging stronger once COVID-19 passes. The stock made a 52-week low and high of GBX 42.00 and GBX 168.00, respectively.

Based on decent growth prospects, we have given a "Speculative Buy" recommendation on Filta Group Holdings Plc at the current price of GBX 102.00 (as on 10 February 2021, before the market close at 8:08 AM GMT).

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