Section1: Company Overview and Fundamental Insights:

1.1 Company Overview:

Neo Performance Materials Inc (TSX: NEO) is engaged in the innovation, development, processing, and manufacturing of rare earth and rare metal-based functional materials. Its operating segments include Magnequench, Chemicals & Oxides, Rare Metals, and Corporate.  Additionally, its geographical segments are Asia, North America, Europe, and Others.

1.2 The Key Positives, Negatives, Investment Highlights and Risks

1.3 Top 10 Shareholders:

The top 10 shareholders together form ~44.66% of the total shareholding. HTM Investments (One) Pty Ltd. and Mawer Investment Management Ltd. hold a maximum stake in the company at ~­­­19.86% and ~11.39%, respectively.

1.4 Key Metrics:

The company reported decent revenue growth in Q3 2022 compared to the same period from last two years, which is a key positive. Furthermore, all the revenue segments of the group have generated elevated revenue, rising on a sequential basis. Additionally, the group has improved its liquidity ratios and outperformed the industry median numbers, another significant plus.

Section 2: Business Updates and Financial Highlights

2.1 Recent Updates: The below picture gives an overview of its recent activities, such as announcement regarding appointment of new President, dividend distribution and receipt of grant.

2.2 Insights on Q3 2022 Financial Performance:

Section 3: Key Risks

Section 4: Stock Recommendation Summary:

4.1 Price Performance and Technical Summary:

4.2 Fundamental Valuation

Valuation Methodology: EV to EBITDA Multiple Based Relative Valuation (Illustrative)

Markets are trading in a highly volatile zone currently due to certain macroeconomic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is December 16, 2022. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock. 

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock. 

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

Disclaimer 

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