Taseko Mines Ltd. (TSX: TKO) is a Canadian mining company which is principally engaged in the production and sale of metals, as well as related activities, including exploration and mine development, within the province of British Columbia, Canada, and the State of Arizona, the United States.

Why Should Investors Book Profit?

• Sequentially drop in margins: In Q4FY21, the company reported its EBITDA margin and operating margin of 55.2% and 30.2%, respectively, lower than 67.9% and 50%, respectively, in Q3FY21. This indicates poor operational performance on a sequential basis. Moreover, the company’s net margin stood lower at 11.4% in Q4FY21, as compared to 17% in Q3FY21.

• Stretched Balance-sheet: In FY21, the company reported a higher debt to equity ratio of 1.49x, which is significantly higher than the industry median of 0.22x. This indicates lower financial flexibility and remains a key concern. Moreover, the company’s long-term debt in terms of total capital stood at 57.7% in FY21, which is considerably higher than the industry median of 13%. This indicates that the company has higher balance sheet risk associated with its operations.

• Increase in cash conversion period: In FY21, the company reported a higher cash conversion period of 58.4 days, which is significantly higher than 37.0 days in FY20. This indicates that the group is taking more time to convert its investments to cash flows.

 Valuation Methodology (Illustrative): Price to CF based

Analysis By Kaline Group

Stock Recommendation:

In Q4FY21, the company reported its Adjusted EBITDA of CAD 52.9 million, which is lower than CAD 76.2 million in Q3FY21. This indicates weak operational performance and remains a key concern for the group. We have valued the stock using the Price to CF-based relative valuation approach and arrived at a target price offering double-digit upside potential (in % terms). We have considered peers like Imperial Metals Corp, Copper Mountain Mining Corp and Capstone Mining Corp. Considering the aforesaid facts, we recommend a ‘Sell’ rating on the stock at the last closing price of CAD 2.87 on April 05, 2022.

One-Year Technical Price Chart (as on April 05, 2022). Source: REFINITIV, Analysis by Kalkine Group

Should Investors Book Profit on this Small Cap Metal and Mining Stock- TKO

Taseko Mines Ltd. (TSX: TKO) is a Canadian mining company which is principally engaged in the production and sale of metals, as well as related activities, including exploration and mine development, within the province of British Columbia, Canada, and the State of Arizona, the United States.

Why Should Investors Book Profit?

• Sequentially drop in margins: In Q4FY21, the company reported its EBITDA margin and operating margin of 55.2% and 30.2%, respectively, lower than 67.9% and 50%, respectively, in Q3FY21. This indicates poor operational performance on a sequential basis. Moreover, the company’s net margin stood lower at 11.4% in Q4FY21, as compared to 17% in Q3FY21.

• Stretched Balance-sheet: In FY21, the company reported a higher debt to equity ratio of 1.49x, which is significantly higher than the industry median of 0.22x. This indicates lower financial flexibility and remains a key concern. Moreover, the company’s long-term debt in terms of total capital stood at 57.7% in FY21, which is considerably higher than the industry median of 13%. This indicates that the company has higher balance sheet risk associated with its operations.

• Increase in cash conversion period: In FY21, the company reported a higher cash conversion period of 58.4 days, which is significantly higher than 37.0 days in FY20. This indicates that the group is taking more time to convert its investments to cash flows.

 Valuation Methodology (Illustrative): Price to CF based

Analysis By Kaline Group

Stock Recommendation:

In Q4FY21, the company reported its Adjusted EBITDA of CAD 52.9 million, which is lower than CAD 76.2 million in Q3FY21. This indicates weak operational performance and remains a key concern for the group. We have valued the stock using the Price to CF-based relative valuation approach and arrived at a target price offering double-digit upside potential (in % terms). We have considered peers like Imperial Metals Corp, Copper Mountain Mining Corp and Capstone Mining Corp. Considering the aforesaid facts, we recommend a ‘Sell’ rating on the stock at the last closing price of CAD 2.87 on April 05, 2022.

One-Year Technical Price Chart (as on April 05, 2022). Source: REFINITIV, Analysis by Kalkine Group