Has Western Areas Ltd got the potential to rise?Team Veye | 04 May 2018 ASX - WSA
Western Areas Ltd (ASX:WSA)
The company published its H1 FY2018 results on 20th Feb’18 highlighting a strong performance across key metrics. The following were the key highlights:
· Strong balance sheet with cash at bank of $132.6m, supplemented by a further $21.5m in receivables and a Kidman equity position of $32.8m;
· Sales revenue of $115.8m ($113.4m);
· Average realised price of nickel (before payability) of $6.81/lb ($6.59/lb);
· EBITDA of $36.4m (underlying $28.9m1);
· EBITDA margin increased to 31.4% (25.5%)
· NPAT increased to $3.5m ($0.5m, including $3.6m gain on Bluejay Mining equity sale);
· Primed for growth with construction completion of the Mill Recovery Enhancement Project (MREP) and the Odysseus Project to be larger with a longer mine life
On 10th Apr’18, the company announced that an early capital works program for the Odysseus Project at Cosmos has been approved by the Board and an Eighteenâ€month program with an estimated cost of A$32m to commence later this month with key government approvals in place.
On 23rd Apr’18, the company announced that the Mill Recovery Enhancement Project (“MREP”) has been commissioned and is producing premium high grade nickel sulphides as planned. MREP product will be blended initially with existing nickel concentrate product for sale. And, construction of dedicated filtration and bagging facilities, at a capital cost of A$3m, to commence this quarter (Q2 CY18), with completion scheduled for Q3 CY18 (Data Source – Company Reports).
The company currently offers very minute fully franked Annual Dividend Yield of 0.59% against a sector average of a decent 2.23%. The company’s EPS stands at 6.95 and EBITD margin at 40.69. The Debt-to-Equity ratio is 0.00 against a sector average of 31.13. The group has a P/E ratio of 43.21 against the sector average of only 28.97. The stock has a Market cap of 927.5m & a Share Volume of 272.79m. The company had cash in hand of $132.5m and 0 debt at 31st Dec’17. The stock price of the company witnessed a growth of 23% immediately followed by a fall of 11% during Apr’18 and seems to back on its way to recovery now (Data Source – Reuters.com).
We are Bearish on “Western Areas Ltd” and give it a “Stay Away” at the current price of $3.50
Veye Pty Ltd(ABN 58 623 120 865), holds (AFSL No. 523157 ). All information provided by Veye Pty Ltd through its website, reports, and newsletters is general financial product advice only and should not be considered a personal recommendation to buy or sell any asset or security. Before acting on the advice, you should consider whether it’s appropriate to you, in light of your objectives, financial situation, or needs. You should look at the Product Disclosure Statement or other offer document associated with the security or product before making a decision on acquiring the security or product. You can refer to our Terms & Conditions and Financial Services Guide for more information. Any recommendation contained herein may not be suitable for all investors as it does not take into account your personal financial needs or investment objectives. Although Veye takes the utmost care to ensure accuracy of the content and that the information is gathered and processed from reliable resources, we strongly recommend that you seek professional advice from your financial advisor or stockbroker before making any investment decision based on any of our recommendations. All the information we share represents our views on the date of publishing as stocks are subject to real time changes and therefore may change without notice. Please remember that investments can go up and down and past performance is not necessarily indicative of future returns. We request our readers not to interpret our reports as direct recommendations. To the extent permitted by law, Veye Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss, or data corruption) (as mentioned on the website www.veye.com.au), and confirms that the employees and/or associates of Veye Pty Ltd do not hold positions in any of the financial products covered on the website on the date of publishing this report. Veye Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services.