Silvercorp Metals Inc

Silvercorp Metals Inc (TSX: SVM) is a mining company based out of Canada. The Group is engaged in the production of zinc, lead and silvers metals from mines in the Chinese region. SVM operates in mines located in Henan Province and Guangdong Province in China.

Recent News

On 28^th May 2020, Silvercorp Metals announced the drilling program, targeting mineralization of gold is underway at TLP, LME and LMW mines based in Ying Mining District in Henan Province, China.

Financial Highlights – Financial Year 2020 (31^st March 2020, USD, thousand)

(Source: Annual Report, Company Website) 

For the financial year ending 31^st March 2020, driven by lower sales from Henan Luoning and Guangdong for the period, the revenue declined to USD 158,829 thousand as against USD 170,519 thousand in FY2019. The income from mine operations stood at USD 59,374 thousand in FY2020 versus USD 70,932 thousand in FY2019. The Group’s operating income stood at USD 52,162 thousand in the financial year 2020 versus an operating income of USD 70,073 thousand in FY2019, reflecting lower sales for the period. The profit before income tax stood at USD 54,112 thousand in the financial year 2020 versus a profit before income tax of USD 72,918 thousand in the financial year 2019. The net income declined to USD 45,203 thousand in FY2020 from a net income of USD 52,047 thousand in the financial year 2019. The cash balance as on 31^st March 2020 stood at USD 65,777 thousand versus USD 67,441 thousand as on 31^st March 2019

Share Price Performance

Daily Chart as of 29 June 2020, after the market close (Source: Refinitiv, Thomson Reuters)

Silvercorp Metals Inc shares closed at CAD 6.89 at the time of writing after the market close on 29 June 2020. Stock's 52 weeks High is CAD 7.69 and Low is CAD 2.12.

Key Risks

Any change in regulations and government policies could affect the overall business of the Company. Liquidity and interest rate risks could affect the operations of the Company. The market conditions in which the Company operates is full of challenges and might impact the operational performance and reduce financial performance as well.

Conclusion

The company has shown a decline in financial performance in the financial year 2020. Both the top-line and the bottom-line performance have declined, with a decline in the profitability for the period. The liquidity position has declined, but the balance sheet remained well-positioned. The recent drilling program at Ying Mining District for mineralization of gold will help the Company to improve its financial performance as gold prices in the global markets are showing signs of improvement. In FY2021, the Group expects to increase the production as compared to FY2020 production levels. SVM is actively seeking acquisitions to achieve growth in the long-term period. The Group operations are impacted by the outbreak of covid-19 pandemic and have been focusing on strengthening its balance sheet and reducing its costs to preserve cash.

Based on the above rationale, we have given a “Hold” recommendation at the closing price of CAD 6.89 (as on 29 June 2020).

Disclaimer

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