Chaarat Gold Holdings Ltd

Chaarat Gold Holdings Ltd (LON: CGH) is an FTSE AIM All-Share Index listed gold mining company with operations in Armenia and Kyrgyz Republic.

Investment Rationale – SELL at GBX 19.60

• Profit Booking: The company’s share price reflected a jump of ~23.50% in the past 1 month and presents a decent opportunity to exit for the investors according to their risk appetite.
• Loss after Tax: The Group reported a net loss of US$3.6 million in FY21, which can continue to put pressure over liquidity.
• Macro Concerns: As per the company, the war in Ukraine and related sanctions against Russia have the potential to impact the Group’s supply chain, costs, and commodity prices in the near term.
• Technical Indicator: The stock of the company is trading close to its upper Bollinger band with a high 14-day RSI level of ~70.39, indicating an overbought stance.

One Year Share Price Chart

(Source: Refinitiv, Analysis conducted by Kalkine Group)

Valuation Methodology: Price/Cash Flow Approach (FY22) (Illustrative)

* Peers: Few peers considered are EVRAZ plc, Hummingbird Resources PLC and Bushveld Minerals Ltd.

*All peers are LSE listed Companies from the Materials sector.

* 1USD=~77.69 GBX

Conclusion

Based on the attractive notional gains in the short-term, macroeconomic instabilities, negative profitability, bearish technical indicators, coupled with the unfavourable Valuation conducted above, we have given a "SELL" recommendation on Chaarat Gold Holdings Ltd at the closing market price of GBX 19.60 (as of 22 April 2022). 

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.’

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