Impax Asset Management Group PLC

Impax Asset Management Group PLC (LON: IPX) is a FTSE AIM UK 50 index specialist asset manager with £34.4 billion of assets under management (AuM).

Investment Rationale – SELL at GBX 1,336.00

• Profit Booking: IPX’s stock has already yielded a scintillating return of around 26% in the past month, while it is trading close to our previously recommended target price. Therefore, it is giving an attractive opportunity to book profit.
• GDP Slowdown: GBP has crashed post weak British GDP data reported by the Office of National Statistics.
• Macroeconomic Risk: The risk appetite of investors can remain dented with decades high inflationary conditions globally, fluctuating US Dollar, soaring energy prices, strong gold prices, among others.
• Technical Indicator: From a technical standpoint, Bollinger Bands suggests that the price has breached the upper Bollinger Band, while the 14-day RSI (~77.47) is also in the overbought position.
• Overvalued Multiples: On a forward 12-month basis – EV/Sales, EV/EBITDA, Price/Earnings, and Price/Cash Flow multiples are overvalued against the Financials industry.

Key Risks

• Currency Risk: The constant strengthening of US Dollar (supported by increasing US Treasury Yield combined with slowdown in Chinese economic growth) can impact the assets’ value.
• Emerging Risk: The likelihood of China Evergrande’s debt default risk poses a systematic risk to the financial markets. Moreover, the structural changes imposed by the Covid-19 pandemic has significantly changed the consumers’ behaviour.

Q4 AUM update (for the quarter ended 30 September 2021, as on 7 October 2021)

 (Source: Company Website)

• AuM Growth: IPX reported an 8% growth (from the last quarter end) in AuM to £37.2 billion.
• Record Net Inflows: It continued to enjoy exceptional growth with net inflows of over £10 billion.
• Good Customer Services: IPX continued to deliver strong services and the asset owners globally are increasingly interested.

Share Price Chart

 (Data Source: REFINITIV, Analysis done by Kalkine Group)

Valuation Methodology: Price/Cash Flow Approach (FY21) (Illustrative) 

Conclusion

IPX has yielded a multibagger return of around 135% in the past year, and it is at verge of hitting our previously recommended target price. Therefore, it is prudent to book profit at the current levels, while the markets are hit by concerns about subdued economic outlook. The risk appetite of investors can remain dampened rising inflationary pressure, supply chain snags and resurgence of Covid-19 cases. The overall demand contraction can derail the economic recovery and put pressure on investors’ risk appetite. The stock made a 52-week High and Low of GBX 1,350.00 and GBX 524.00, respectively.

Based on the macroeconomic instabilities, exceptional notional gains, overstrained technical stance, and negative valuation conducted above, we have given a “SELL” recommendation on Impax Asset Management Group PLC at the current market price of GBX 1,336.00 (as on 12 November 2021, at 8:15 AM GMT), while we look forward to reinvesting when the Company when the short-term economic turbulence subsides.

Cora Gold Ltd

Cora Gold Ltd (LON: CORA) is a FTSE AIM All-Share listed mining royalty entity, focusing on developing the Sanankoro Gold Project in Southern Mali.

Investment Rationale – SELL at GBX 13.00

• Speculative Stock: CORA is a penny stock with small market capitalization, and it is quite exposed to the market volatilities.
• Weak Fundamentals: CORA did not generate any revenue in H1 FY21 and continued operating losses, and thus it is exposed to liquidity risk.
• Economic Slowdown: The post-lockdown supply chain bottlenecks, surging energy prices, inflationary market conditions, rising US Dollar and Treasury Yield can impact the Company’s growth trajectory.
• Profit Booking: CORA’s stock price has surged around 62% in the past six months, giving an opportunity to book profit.
• Technical Indicator: From a technical standpoint, Bollinger Bands suggests that the price is trading close to the upper Bollinger Band, reflecting the overbought position.

Risk Assessments

• Macroeconomic Uncertainty: The Gold prices shall remain subdued in the short-term due to the strengthening of the US Dollar and apprehensions regarding the early asset tapering by the Federal Reserve. Moreover, the recent upsurge in cryptocurrency could also outshine the prices of gold and other precious metals.
• Liquidity Crunch: It is a penny stock with history of operating losses; thus, it is exposed to significant liquidity risk.

Interim Results (for the 26 weeks to 1 October 2021, as on 10 November 2021)

 (Source: Company Website) 

• Strong Activity: During H1 FY21, CORA witnessed expanded over 40,000 million drill programmes at the Sanankoro Project.
• Liquidity: At the end of June 2021, cash position stood at US$5.7 million, following the recent fundraising.
• Estimation: The Group expects to advance Mineral Resource Estimate in H2 FY21 with Definitive Feasibility Study in H1 FY22.
  

Share Price Chart

 (Data Source: REFINITIV, Analysis done by Kalkine Group)

Conclusion

CORA is a penny stock with small market capitalization, and it is quite exposed to the market volatilities. Although the Group has shown confidence in the outlook; however, it can face a bumpy ride in the short-term given the inflationary market conditions, surging US Dollar, subdued consumer confidence, and other macroeconomic challenges.

As the stock price has given a decent return in the past six months, it is prudent to liquidate position in profit since the gold prices can face retracement in the short-term. The stock made a 52-week High and Low of GBX 20.00 and GBX 6.90, respectively

Based on the recent share price gains, macroeconomic uncertainties, and overbought technical stance, we have given a “SELL” recommendation on Cora Gold Ltd at the current market price of around GBX 13.00 (as on 12 November 2021, at 8:05 AM GMT), while we look forward to reinvesting profit plus gains once the short-term uncertainty fades away.

*All forecasted figures and Industry Information have been taken from REFINITIV.

*The reference data in this report has been partly sourced from REFINITIV.

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

Disclaimer

References to ‘Kalkine’, ‘we’, ‘our’ and ‘us’ refer to Kalkine Limited.

This website is a service of Kalkine Limited. Kalkine Limited is a private limited company, incorporated in England and Wales with registration number 07903332. Kalkine Limited is authorised and regulated by the Financial Conduct Authority under reference number 579414.

The article has been prepared for informational purposes only and is not intended to be used as a complete source of information on any particular company. No advice or information, whether oral or written, obtained by you from Kalkine or through or from the service shall create any warranty not expressly stated. Kalkine does not intend to exclude any liability which it is not permitted to exclude under applicable law or regulation.

Kalkine does not offer financial advice based upon your personal financial situation or goals, and we shall NOT be held liable for any investment or trading losses you may incur by using the opinions expressed in our publications, market updates, news alerts and corporate profiles. Kalkine does not intend to exclude any liability which it is not permitted to exclude under applicable law or regulation. Kalkine’s non-personalised advice does not in any way endorse or recommend individuals, investment products or services for your personal financial situation. You should discuss your portfolios and the risk tolerance level appropriate for your personal financial situation, with a professional authorised financial planner and adviser. You should be aware that the value of any investment and the income from it can go down as well as up and you may not get back the amount invested.

Kalkine Media Limited, an affiliate of Kalkine Limited, may have received, or be entitled to receive, financial consideration in connection with providing information about certain entity(s) covered on its website.