In today’s briefing:
- Empire Energy Group (ASX:EEG) – Gas Bells Are Ringing
- Step One Clothing Ltd – Underwear Under Valued
- Step One Holdings Ltd – Underwear Under Valued
- Empire Energy Group Ltd – Gas Bells Are Ringing
- X2M Connect Ltd – China Contract Adds to H2 Progress
- Amaero International Ltd – “Plan B” Brings Risk but Potentially Greater Returns
- X2M Connect (ASX:X2M) – China Contract Adds to H2 Progress
- Amaero International (ASX:3DA) – “Plan B” Brings Risk but Potentially Greater Returns
Empire Energy Group (ASX:EEG) – Gas Bells Are Ringing
- Carpentaria-2H testing results continue to build the economic case for EEG
- IP30 gas flow of 3.0 mmcfd/1000m (normalised) is on the button and early analysis suggests gas recoveries of 6-8Bcf/well could be achievable
- The business case is building with upgraded resource certification to come heading to a FID target date of end-2023.
Step One Clothing Ltd – Underwear Under Valued
- Step One Clothing (ASX:STP) is a Direct to Consumer (DTC), 100%-own-brand underwear retailer specialising in anti-chafe bamboo underwear across men’s and women’s wear, with a core colour range supplemented by regular limited-edition releases, all with FSC (Forest Stewardship Council) certification throughout the supply chain.
- The company has operations in Australia (67% of sales), UK, (30% of sales) and the US (3% of sales). A H1 FY23 sales decline of 5.7% was better than our industry average estimate of-19% cycling lockdown, while lower sales and marketing spend saw EBITDA in-line with the pcp at $7.6m, the highest of any industry peer.
- H2 FY23 should see similar trends and deliver EBITDA well above consensus.
Step One Holdings Ltd – Underwear Under Valued
- Step One Clothing (ASX:STP) is a Direct to Consumer (DTC), 100%-own-brand underwear retailer specialising in anti-chafe bamboo underwear across men’s and women’s wear.,
- A H1 FY23 sales decline of 5.7% was better than our industry average estimate of -19%, while EBITDA was in-line with the pcp, the highest of any industry peer.
- On our estimates this superior business model currently trades at a PER of 1.0x ex-cash. Inventory is the key risk, currently representing ~two years’ sales, but is low fashion risk.leared.
Empire Energy Group Ltd – Gas Bells Are Ringing
- Empire Energy Group Limited (ASX:EEG) is an oil and gas producer/developer, with onshore Northern Territory (NT) and US oil/gas production assets.
- EEG has the largest tenement position in the highly prospective Greater McArthur Basin, which includes the Beetaloo Sub-basin.
- The NT energy basins are fast developing as strategic high-calorific gas bolsters for east coast Australia’s future domestic requirements, growing Gladstone LNG ullage and potential supply for Darwin’s expanding LNG export terminals, amid funding support from Territory and Federal governments.
X2M Connect Ltd – China Contract Adds to H2 Progress
- X2M Connect Ltd (ASX:X2M) has developed and is commercialising a patented proprietary Internet of Things (IoT) solution predominantly focused on the utilities sector across the Asia Pacific region, converting legacy meters into smart meters.
- The company has announced it has secured $1.8m in hardware water quality sensor sales in China with three new contracts.
- The contracts bring the contribution from China to $3.4m this financial year to date which exceeds the revenue generated from China in FY22.
Amaero International Ltd – “Plan B” Brings Risk but Potentially Greater Returns
- Amaero International Ltd (ASX:3DA) is a global specialist in metal additive manufacturing for the defence, aerospace, and other industrial sectors.
- Following a strategic review, Amaero has shifted its focus to titanium powder production and has created a new United Arab Emirates-based enterprise, Amaero Advanced Metals Ltd, to build an 827-tonne a year titanium powder operation within Abu Dhabi’s KEZAD industrial park.
- The nuances of the focus have shifted since the company first announced plans to concentrate on the UAE and titanium powder operations but “Plan B” allows Amaero shareholders to retain 100% ownership of the project which has been scaled back to focus on the opportunity with the greatest economic return.
X2M Connect (ASX:X2M) – China Contract Adds to H2 Progress
- X2M Connect (ASX:X2M), which is focused on digitising the utilities sector across APAC, has secured $1.8m in hardware water quality sensor sales in China with three new contract.
- The contracts bring the contribution from China to $3.4m this financial year which exceeds the revenue generated from China in FY22;
- While this announcement is in our numbers, it provides comfort for both near-term and longer-term estimates as units in the field support future recurring subscription fees.
Amaero International (ASX:3DA) – “Plan B” Brings Risk but Potentially Greater Returns
- Amaero has substantially shifted its strategy to focus on titanium powder production with a new project planned for the UAE.
- With the greenlight slated for the end of June 2023, we conservatively anticipate first production in H1 FY25, powder qualification in H1 FY27 and “at capacity” production in H1 FY2.
- We have substantially restruck our earnings forecasts to reflect this new project.
💡 Before it’s here, it’s on Smartkarma
Sign Up for Free
The Smartkarma Preview Pass is your entry to the Independent Investment Research Network
- ✓ Unlimited Research Summaries
- ✓ Personalised Alerts
- ✓ Custom Watchlists
- ✓ Company Data and News
- ✓ Events & Webinars
