Ecora Resources PLC

ECOR Details

Ecora Resources (ECOR) is the leading royalty company focused towards supporting the supply of commodities essential to creating a sustainable future.

Financial Results

• ECOR announced the half-year results for the 6 months ended 30 June 2023. The portfolio contribution in H1 FY 2023 stood at $44.5 Mn (H1 FY 2022: $92.8 Mn) with royalty as well as metal stream related revenue in H1 FY 2023 of $42.7 Mn reflecting the commencement of the transition to mining outside of the Group's private royalty area at Kestrel along with the normalisation in commodity prices from record levels in H1 FY 2022.
• Its adjusted earnings per share stood at 9.06c reflecting the lower portfolio contribution relative to the same period last year.
• The company’s net debt as at 30^th June 2023 stood at $43.3 Mn (31 December 2022: $36.4 Mn).

Key Updates

The company released the trading update for the period 1 July - 30 September 2023. For Q3 FY 2023, the portfolio contribution stood at $5.8 Mn (Q2 FY 2023: $14.7 Mn) as Kestrel operations were mainly outside the Group's private royalty area as well as there was maintenance at Voisey's Bay.

Outlook

The group is expecting a number of key growth milestones to be achieved in the near-term development portfolio including progress on construction of West Musgrave, construction financing options for the Piauí nickel project as well as feasibility studies in relation to the Santo Domingo project.

Fundamental Valuation

EV/Sales Based Relative Valuation (Illustrative)

Key Risks

Weak global growth, volatility in the market, global slowdown, etc. are some of the risks the company is exposed to.

Stock Recommendation

The stock has made a 52-week low and high of GBX 81.40 and GBX 159, respectively. The company’s performance is exposed to the risks related to the global slowdown as well as geopolitical tensions. Therefore, investors should exit the stock.

Hence, a ‘Sell’ rating has been provided on the stock at the closing price of GBX 99.00 per share, down by 1.69% as on 2^nd January 2024.

Technical Overview:

ECOR Daily Technical Chart, Data Source: REFINITIV

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

Note 1: Past performance is neither an indicator nor a guarantee of future performance.

Note 2: The reference date for share price chart and stock valuation is based on January 2, 2024. 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.