Solo Oil PLC

United Kingdom-based Solo Oil PLC (SOLO) is an oil and gas investment company. The company makes direct and indirect investments in development, exploration, and producing oil and natural gas properties. The group invests in offshore and onshore properties in the Americas, Europe and Africa.

Ruvuma Update (as on 24^th September 2019)
Ruvuma Update is evidently an encouraging update for its Ruvuma JV Partners and Solo Oil PLC and also moves a stage nearer to realising the main price of the material interest in this high-level quality asset.

Recent News
On 23rd September 2019,the company announced that it had reinforced its senior management team with the appointment of Doug Rycroft as Chief Operating Officer (CEO) and Romina Mele-Cornish as Chief Financial Officer (CFO) with an instant effect.

On 11^th September 2019,the company announced that it had signed agreements with NRG Well Management Ltd (NRG) and THREE60 Energy Ltd (THREE60) and to offer the group with an operational ability as it executes its strategy.

On 10^th September 2019, the company announced that it had signed a purchase and sale agreement to exit its 20 per cent investment in Burj Petroleum Africa Ltd.

Financial Highlights (for the year ended 31^st December 2018, £’000)

(Source: Annual Report, Company Website)

In the financial year 2018, the company’s revenue from contracts with customers was nilas compared with the previous year data. Gross profit increased to £1,777 thousand against the £614 thousand in FY17. Operating loss stood at £378 thousand, a decrease from the prior year data. Loss before taxation rose to £1,667 thousand as compared to a loss of £1,659 thousand in FY17. Basic and diluted loss per share stood at 0.33 pence, a decrease of 0.10 pence against the loss of 0.43 pence in FY17. Total assets surged from £19,027 thousand in FY17 to £23,454 thousand in FY18. Cash and cash equivalents stood at £2,999 thousand, an increase from the previous year data.

Share Price Performance

Daily Chart as at September-25-19, before the market closed (Source: Thomson Reuters)

On 25th September 2019, Solo Oil PLC shares were trading at GBX 1.80 at the time of writing before the market close (at 8:52 AM GMT), up by 2.57% against the previous day closing price. Stock's 52 weeks High and Low are GBX 2.43/GBX 1.20. The company’s stock beta was negative 0.59, reflecting the negative movement of the stock as compared to the benchmark index.

Conclusion
The company’s revenue from contracts with customers for the financial year 2018 remained nil. The profitability margins have remained stagnant or declined. The financials of the group are substantially dependent on prevailing prices of oil and gas, which are out of the control of the group and are subject to large fluctuations in response to relatively minor changes in the supply of and demand for oil and gas. The company’s bottom-line performance has remained in the negative zone for the current period. The company operates in a challenging environment which requires continuous investments, sometimes at the cost of profitability, to stay ahead of the competition.

Currently, the stock is trading near the 52-week mid, suggesting that the upside potential might be limited, and the company can face stiff resistance at the current level. The company’s P/E and P/CF multiples are in negative zone as compared to the industry multiples. The company’s EV/EBITDA multiple is significantly higher as compared to the industry multiple, reflecting overstretched valuations.
Based on the above factors, we recommend investors to “Avoid” taking fresh positions at the current price of GBX 1.80 as on 25th September 2019, before the market close.
 

Jubilee Metals Group PLC

London, the United Kingdom-based Jubilee Metals Group PLC (JLP) is a diversified metal development company. The group 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.

On 13^th November 2019, the company will announce the FY2019 earnings.

Recent News
On 5^th September 2019, the company announced that the JV PGM Plant (PGM recovery plant) aimed for the improvement of the PGM rich material owned with its subsidiary Windsor PGM Project (Windsor SA) had effectively been commissioned and is wholly operational.  In its first operational month of August 2019, the Windsor PGM Project generated 1,346 PGM ounces.

Six Months Operations Update (as on 5th August 2019)
The company’s revenue increased by 75 per cent to £14.36 millionas compared to H2 FY18. Operational earnings surged by 47 per cent to £5.64 million against the H2 FY18. In H1 2019, production of chrome concentrate surged to reach 164,936 tonnes with both the Windsor chrome and the DCM fine chrome operations brought on-line.

In June 2019, the joint venture Platinum Group Metal (PGM) retrieval plant for the Windsor Platinum Group Metal project begun commissioning, through the grinding circuit and this circuit was critical for attaining high retrievals of PGMs being fetched into operation in July 2019. During H1 2019, Windsor PGM project has delivered PGM rich material of 212.6 thousand tonnes. The company expects to continue its strong performance in the full year due to the speeding up of the Kabwe vanadium, zinc and lead project, following the acquisition of the Sable Zinc Kabwe Limited refinery in Zambia.

Share Price Performance
 
Daily Chart as at September-25-19, before the market closed (Source: Thomson Reuters)

On 25th September 2019, Jubilee Metals Group PLC shares were trading at GBX 3.40 at the time of writing before the market close (at 9:52 AM GMT) and remained the same against the previous day closing price. Stock's 52 weeks High and Low are GBX 3.75/GBX 2.02. The company’s stock beta was 1.24, reflecting the higher movement of the stock as compared to the benchmark index.

Conclusion
The company faces political risk and potential nationalisation, although they believe the latter would face significant hurdles. The company’s operations are impacted by multiple risks and uncertainties, such as the impact of volatility of commodity prices, currency fluctuations, environmental risks, government regulation, etc. The company had shown a decent trend in top-line and bottom-line performance in the current period.

Moreover, the company is trading near its 52-week high, raising doubts at its upside potential at current prices. The company’s EV/EBITDA and P/CF multiples are significantly higher as compared to the industry multiple, reflecting overstretched valuations.

Based on the macro headwinds with political and economic uncertainties, investors are recommended to keep a “Watch” on the stock at the current price level of GBX 3.40 (as on 25th September 2019, before the market closed), with support from few catalysts needs to be evaluated at a later stage.

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