Caledonia Mining Corporation PLC

Caledonia Mining Corporation PLC (LON: CMCL) is an FTSE AIM All-Share listed gold producer with a cash generative business model.

Investment Rationale – SELL at GBX 1,035.00

• Profit Booking Opportunity: The stock price witnessed a decent rally and managed to breach the target levels provided in the last coverage. Thus, it would be a decent opportunity to book profit for the investors.
• Subdued Investors’ Sentiments: The recent fatal accident at Blanket Mine, stepping down of CEO, and geopolitical tensions between Russia & Ukraine may weaken the investors’ sentiments.
• Significant Reduction in Cash Balance: CMCL demonstrated a substantial reduction in cash & cash equivalents from USD 21.6 million at the end of Q3 FY20 to USD 13.0 million as of 30 September 2021.
• Technical Indicator: From a technical standpoint, the stock price is hovering near the upper Bollinger band, and the 14-days RSI (~77.07) is in the overbought territory.
  

Share Price Chart

 (Source: REFINITIV; Analysis done by Kalkine Group)

Valuation Methodology: Price/Earnings Approach (FY22) (Illustrative)

Conclusion                                                                                         

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.

Based on the decent profit booking opportunity, stepping down of CEO, bearish technical indicators, coupled with the unfavourable valuation conducted above, we have given a "SELL" recommendation on Caledonia Mining Corporation PLC at the closing market price of GBX 1,035.00 (as of 10 March 2022). 

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

Note 2: Investment decision should be made depending on the investors’ appetite on 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 subject to the factors discussed above.

Note 3: Dividend Yield may vary as per the stock price movement.

Note 4: Target Price refers to a price level which 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 5: ‘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.’

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