OceanaGold Corp (TSX: OGC)

OceanaGold Corp (TSX: OGC) is engaged in the exploration, development, and operation of gold and other minerals, with a presence in the Philippines, New Zealand, and, to a lesser extent, the United States.

Key highlights 

• Vigorous production outlook: The company's asset bases are performing well and are supported by several recent positive developments. As a result, the firm plans to increase output and profitability while lowering costs in the future, which is a big positive. Furthermore, the business anticipates that restarting DIDIPIO mine would contribute ~120 koz gold and ~12 kt copper every year.

Source: Company 

• Healthy guidance on FY2021: For the full year, the Company expects to produce 340,000 to 380,000 ounces of gold from the Haile Gold Mine and the New Zealand operations on a consolidated basis. The combined AISC is estimated to be between USD 1,050 and 1,200 per ounce sold, with consolidated cash costs between USD 750 and 850 per ounce sold.

Source: Company 

• Industry beating margin profile:The group reported strong operational efficiency during Q1 2021, on the back of healthy production and increased average realization price of gold, which helped the company leaping the industry median numbers on many fronts, which is a key positive. The chart below gives a glimpse of this.

• Healthy liquidity: As of March 31, 2021, the Company had total available liquidity of USD 195.5 million, including 145.5 million in cash along with undrawn revolving credit facilities of USD 50.0 million. At the end of the first quarter, the Company’s net debt position stood at USD 164.3 million.
  

Financial overview of Q1 2021

Source: Company 

• In Q1 2021, the revenue reported by the company increased 8% to USD 148.9 million compared to USD 138.2 million, primarily due to improved performance from Haile and higher average gold prices received.
• Operating profit stood at USD 28.7 million in Q1 2021, against a loss of USD 6.5 million in pcp, primarily due to lower operating expenses.
• The company reported a Profit before income tax of USD 21.7 million in Q1 2021 compared to a loss of USD 31.7 million in the previous corresponding period.
• Primarily due to higher revenue and lower operating expenses along with higher average realization price of metal helped the company to clock a net income of USD 16.0 million, against a loss of USD 26.0 million in pcp.
• In Q1 2021, gold production stood at 83,191 ounces at All-In Sustaining Costs (“AISC”) of USD 1,229 per ounce on sales of 82,847 ounces of gold.
  

Risks associated with investment

The Company’s financial performance is mostly dependent on the price of gold, which directly affects their profitability and cash flow. Any drawdown in the gold prices would impact the group’s performance. 

Valuation Methodology (Illustrative): EV to Sales 

Stock recommendation

Q1 2021 was a transformational period for the company as it came out with robust performance, strong cash position, healthy outlook for FY2021; all these factors give a glimpse of solid foundations led by the company to achieve higher growth in future. Furthermore, the company is excited about the next few years, and the opportunity to drive value from internal growth with the lower operating cost is a key positive. Additionally, the relentless focus on delivering restarting Didipio mine and advancing organic growth is expected to create value over the long term. Based on technical analysis, the stock has support at CAD 2.15 level. Therefore, based on the above rationale and valuation, we recommend a “Speculative Buy” rating on the stock at the closing price of CAD 2.62 on June 10, 2021. We have considered B2Gold Corp, Alamos Gold Inc, Yamana Gold Inc. as the peer group for the comparison.

*Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached or if the price closes below the support level.

One-Year Technical Price Chart (as on June 10, 2021). Analysis by Kalkine Group

*The reference data in this report has been partly sourced from REFINITIV.

Viemed Healthcare Inc

Viemed Healthcare Inc (TSX: VMD), provides equipment and home therapy to service patients with various respiratory diseases. The group is a high-level service provider using best in class technology and equipment to increase the quality of life in the homes of patients with respiratory conditions.

Key highlights

• Robust financial performance: The pandemic provided the corporation with more tailwinds than headwinds, resulting in a record year. Revenues increased by 63.6% to USD 131.31 million, up from USD 80.26 million in FY2019, and net income increased to USD 31.5 million, up from USD 8.5 million for the year ending December 31, 2019.

Source: Company

• Revenue guidance for Q2 2021:The management is confident that its main business would generate net revenues of USD 26.2 – USD 27.2 million, with extra revenues of USD 0.5 – USD 1.0 million from sales and support connected to the COVID-19 pandemic. As a result, overall sales for Q2 2021 are expected to range between USD 26.7 and USD 28.2 million.

• Foraying into the new sector:The Company announced its foray into the “Remote Patient Monitoring” sector as they acquired a 5% interest in VeruStat, Inc, a newly created company focusing on (“RPM”), for approximately USD 600,000 using cash in hand. The investment is part of the Company’s launch into the healthcare technology sector. It would immediately allow the company’s salesforce to offer a new revenue source to its physician network around the country.

• Healthy balance sheet: On March 31, 2021, the Company had a cash surplus of USD 31.1 million and a total working capital balance of USD 26.4 million, compared to USD 24.2 million on December 31, 2020. In addition, the company reduced its gross long-term debt from USD 6.6 million on December 31, 2020, to USD 6.1 million on March 31, 2021.

Financial overview (Expressed in thousands of U.S. Dollars)

Source: Company

• Significant growth was registered in Q1 2021, as the Net revenues from core business stood at USD 25.5 million, an increase of 12% compared to the previous corresponding period. Total revenues came to USD 28.4 million, including approximately USD 2.9 million of product sales and services related to the ongoing COVID-19 pandemic.
• In Q1 2021, the company's operating income stood at USD 1.3 million, against USD 4.6 million in pcp. The decrease in operating income was primarily due to higher SG&A expenses coupled with loss on disposal of property and equipment.
• Net income registered by the Company in the reported period, totaled USD 1.6 million, compared to USD 4.2 million in pcp, the decline in net income was primarily due to higher SG&A expenses. 
  

Risks associated with investments

The company is susceptible to various risks, including the uncertainty from the general business, market and economic conditions, impact of the covid-19 pandemic, financial constraints, the company's ability to implement business strategies and pursue opportunities, etc.

Valuation Methodology (Illustrative): EV to Sales

Stock recommendation

Despite the problems it faced in January and February, the group's new patient uploads in March were the highest of any month since the pandemic began, allowing it to increase its core market. The company is keen to start deploying its new initiatives alongside traditional sales tactics as additional healthcare networks emerge across the world. Furthermore, the management anticipates net sales of USD26.7 - USD28.2 million in Q2 2021. The firm is excited about the strategic alliances, organic growth, and acquisition prospects that it expects to contribute to its expansion in 2021, thanks to its strong liquidity. Based on technical analysis the stock has support at CAD 7.3 level. Therefore, based on the above rationale and valuation, we recommend a "Speculative Buy" rating on the stock at the closing price of CAD 8.89 as on June 10, 2021. We have considered Electromed Inc, Greenbrook TMS Inc, Itamar Medical Ltd, etc. as the peer group for the comparison.

*Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached or if the price closes below the support level.

One-Year Technical Price Chart (as on June 10, 2021). Analysis by Kalkine Group

*The reference data in this report has been partly sourced from REFINITIV.

Disclaimer

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