It’s time for another batch of Five Under 50 Cents – although there is a tweak this time, it’s “Five Under 50 or in the 50s.” That’s because XRF Scientific has pushed through 50 cents in the last month – and it’s a stock I wanted to feature.
1. Magnis Energy Technologies (MNS, 36.5 cents)
Market capitalisation: $330 million
I looked at Magnis Energy Technologies in January as one of three exciting battery metals stocks [1], when it was trading at 17.5 cents. MNS has since surged to 35.5 cents, but that could only be the beginning of this story.
Magnis is developing extra-fast charging (EFC) battery cells, to be made initially at its plant under construction in New York state. The batteries combine Magnis’ proprietary graphite-silicon anode technology with the technology of its US partner C4V (of which Magnis owns 10%) to develop lithium-ion batteries (LIBs) capable of a higher voltage and very fast charging times for electric vehicles (EVs). Tests last year tests showed that EV batteries developed by C4V could achieve 85% charging in six minutes, using unoptimised cells. This testing continues, using battery cells optimised for very fast charging, with several unnamed EV makers involved. Aside from being very fast-charging, the C4V batteries can be a cheaper alternative than current EV batteries, as well as having a less-volatile supply chain, because they don’t use nickel or cobalt.
So far, Magnis has total minimum binding sales agreements for the cells of US$729 million, or almost $1 billion, augmented by a recently announced US$74 million binding contract with a US government supplier. The company’s New York plant is about one-quarter compete and the company expects to commence test-run production by the end of this year, and scale-up to what it calls fully automated production by about March or April 2022 – its binding sales contracts start kick in next year.
Magnis also has its own potential supply of natural flake graphite, which is used in the LIB anode – it is where the lithium metal is oxidised – through its wholly owned Nachu graphite project in Tanzania. This world-class graphite deposit is fully permitted and Magnis says it is “shovel-ready,” pending financing. The graphite material from Nachu, which is up to 99.95% purity, can go into Magnis/C4V batteries as well as to other battery makers.
2. Alcidion (ALC, 40 cents)
Market capitalisation: $409 million
ALC develops a range of healthcare software products, which it describes as “informatics” – not just capturing data but leveraging it to improve human health and the delivery of health care services. Its four main products are;
- Patientrack – software that captures patient data at the bedside, whether directly entered on a tablet or integrated from patient monitors. Patientrack works as an “early warning” tool, helping to detect deadly conditions like sepsis and acute kidney injury. It helps doctors to know a patient’s status in real-time, and quickly alerts them to deteriorating patients. The Patientrack bedside monitoring solution also reduces the time patients can spend in hospital, maximising efficiency of healthcare spending.
- Smartpage – a web-based system for hospital communication and task management, addressing the requirements of both clinical and nonclinical users.
- Miya Precision – software based on a fast healthcare interoperability resources (FHIR) platform – the global standard application programming interface for exchanging electronic health records – that enhances healthcare organisations’ existing IT investments by establishing a system of engagement aligned with clinical workflows.
- Miya MEMRe – a mobile electronic medical record (EMR) that enables clinicians to review their current activity and caseload, be notified of critical issues, and access comprehensive patient records on the go. is designed to exploit the vast amount of information available in an organisation’s EMR and clinical systems, distilling that data and presenting it in an interface that aligns to clinical workflow.
Alcidion has 336 hospitals across Australia, New Zealand and the UK (with a combined 57,000 beds) using its software products, and 73 healthcare organisations. Last year, the company responded to the pandemic by designing and implementing a new COVID-19 assessment tool in the Patientrack software, to help hospitals identify potential cases sooner. Nurses and doctors use Patientrack to carry out critical assessments of each patient presenting to hospital with a respiratory illness: the system can automatically alert appropriate healthcare professionals like respiratory doctors and infection control teams if answers indicate signs of COVID-19, and then place a flag on the patient’s record.
The tool removes the need for paper records and enables hospitals to provide real-time and complete information to health authorities on the number of people screened, tested positive and who have died. The COVID-19 response tool exemplifies the business drivers for Alcidion: hospitals and health services need complete information provided in real-time, and cannot rely on paper-based records.
Alcidion is not yet a profit-maker, but its numbers are heading in the right direction. Revenue for FY21 was up 39%, to a record $25.9 million. Of that, recurring revenue rose by 56%, to $16.3 million. At the EBITDA (earnings before interest, tax, depreciation and amortisation) level the company made a loss of $500,000, narrowing that from a $3.4 million loss in FY20. At the underlying level (excluding M&A advisory and share-based payments) EBITDA was positive, at $500,000, and operating cashflow also swung into the positive, at $1.5 million, an improvement of $3.6M on the $2.1 million negative operating cashflow figure in FY20. The company has cash reserves of $25 million, and says it enters FY22 with a strong pipeline of business and $15.1 million of contracted revenue already signed, a figure 18% higher than at same time last year. I think Alcidion is poised for further share price appreciation.
3. Imugene (IMU, 40.2 cents)
Market capitalisation: $2.1 billion
Imugene is a drug developer working in the field of immuno-oncology, a form of cancer treatment based on activating patients’ own immune system to identify and eradicate tumours. Its lead product is HER-Vaxx, a cancer vaccine designed to activate B-cells (a type of white blood cell) and treat tumours that over-express the HER-2/neu receptor, such as gastric, breast, ovarian, lung and pancreatic cancers.
I took a look at Imugene in November last year [2], naming it one of six potential biotech stars on the ASX, at 6.3 cents. It has rocketed to 40 cents, having traded as high as 47 cents in May. The main story is the positive results of its Phase II trial of HER-Vaxx, in HER-2-positive gastric cancer. This trial is designed to assess the efficacy, safety and immune response in metastatic gastric cancer overexpressing the HER-2 protein. The positive data coming out of the trial means Imugene will now put HER-Vaxx into three separate new Phase II studies, each in gastric cancer, to study how the drug works against early, mid and late-stages of the disease.
Imugene’s second program is work in oncolytic virotherapy, on the back of the CF33 oncolytic virus that it has licensed, which was invented at the City of Hope cancer research centre in California. CF33 is designed to selectively kill tumour cells, while activating the immune system against cancer cells, with the potential to improve clinical response and survival. CF33 is the basis for three therapeutic candidates:
- OnCARlytics – a combination immunotherapy using the CF33 oncolytic virus to promote CD19-CAR T cell anti-tumour responses, to target and eradicate solid tumours that are otherwise difficult to treat with CAR-T therapy alone.
- VAXinia – a combination immunotherapy going into a Phase 1 trial looking at its effect on metastatic melanoma, non-small cell lung, gastric, colorectal, Triple Negative Breast Cancer (TNBC), bladder, head and neck and renal cell cancers.
- CHECKvacc – a drug candidate that is headed for clinical trials against metastatic, triple-negative breast cancer (TNBC).
In July, Imugene and City of Hope secured investigational new drug (IND) status from the US Food & Drug Administration (FDA), and will take CHECKvacc into Phase I trials, against metastatic, triple-negative breast cancer (TNBC). Clinical trials of OnCarlytics are expected to kick-off in 2022.
Last month, Imugene announced a partnership with Celularity, a clinical-stage biotechnology developer, to collaborate on a novel treatment for solid tumours. The tie-up will see IMU’s CD19 oncolytic virus technology combined with Celularity’s CD19-targeting allogenic chimeric antigen receptor (CAR) T cellular therapy (CyCART-19). The strategy uses an oncolytic virus to prime tumour cells for destruction by causing the expression of a tumour marker that can be used as a target for CAR T therapy
Imugene has a lot on its plate, but recently raised $90 million to take its cash pile to $130 million, so it has room to spend what it needs on development. Earlier this month, Imugene became a constituent of the S&P/ASX 300 Index, which has brought-in index-oriented investors.
4. XRF Scientific (XRF, 58 cents)
Market capitalisation: $77 million
XRF Scientific is a specialist provider of equipment and consumables which are used in sample preparation for x-ray fluorescence spectrometry analysis. The company’s technology is used to measure and analyse the composition and purity of materials; it is mainly applied in industrial quality control and in process control for manufacturing processes in industries such as metals and mining, construction materials, chemicals and petrochemicals. XRF manufactures the equipment and chemicals in Perth and Melbourne.
Its range of equipment covers electric or gas fusion machines, flux weighing machines and other lab equipment such as sample crushers, furnace/ovens and pressing/pellet machines. The core products – and biggest sellers – are the fusion machines, which convert a mix of the mineral sample and flux into a glass plate by melting the mix. The mineral sample is spread within the matrix of the glass compound allowing for the most accurate analysis in an XRF spectrometer.
The company also makes the consumables that go into preparing the lab samples for its fusion machines. The main consumable product is Flux, which is a chemical that is fused with a mineral sample to ensure accurate spectrometry analysis. XRF also provides release agents (for cleaning and equipment maintenance) and reference materials (for machine calibration).
XRF also makes precious metals products, mainly platinum crucibles that are used in preparation machines (new and refining), platinum electrodes for lab use, semi-finished products suitable for non-mining applications, and bespoke related products for clients.
After listing in 2006, XRF rode the resources boom, but found itself over-exposed when the commodity cycle turned downward after 2012, with 95% of revenue mining-related. XRF invested heavily to build its business in other areas, particularly where its technology is used in the construction industry and the manufacturing of chemical and petrochemical products. It now has strong demand from mining, as well as a range of industrial customers – demand is now driven by commodity prices, as well construction activity and demand for manufactured goods. Its German office is serving a growing customer base in large industrial platinum-product markets.
FY21 saw record revenue of $31.3 million, up 8%, and record net profit or $5.1 million, up 64%. XRF paid a fully franked dividend of 2 cents a share, up from 1.4 cents a year ago.
XRF is a great example of a specialised company that quietly goes about its business. This stock should go quietly about its share price progress, too.
5. Lindsay Australia (LAU, 36.5 cents)
Market capitalisation: $111 million
Listed in 1994, Lindsay Australia might not be well-known on the stock market, but it plays a crucial role in the nation’s food supply. Lindsay is an integrated transport, logistics and rural supply company that has a specific focus on customers in the food processing, food services, fresh produce, agriculture and horticulture industries. The company started life in 1953 carrying local fruit and vegetables to the trains in Coffs Harbour for transportation to the Sydney markets. Lindsay now has a national (mainly east coast) network of almost 40 stores and depots.
The company’s unique difference is its involvement all along the supply chain, to help farmers grow, package, transport and distribute their produce throughout Australia and the world. This starts with employing agronomists to work with farmers in the growing regions, all the way to getting the produce to market in Australia, or to export. The Lindsay Fresh Logistics business was established in 2014 to complement existing transport operations: it is structured as a one-stop shop, that handles import and export logistics including documentation, protocol compliance, warehousing, fumigation, ripening and port delivery services.
The other transformative step in recent years has been Lindsay’s “multi‐modal” diversification strategy, which has seen it integrate road and rail logistics services. In FY21, Lindsay generated record revenue of $435.2 million – up 6% – which was been driven by its refrigerated rail diversification strategy: rail expansion lifted Transport division revenue to a record $297.3 million, with 110 new refrigerated rail containers added to capacity in FY21. Underlying profit before tax rose 24%, to $13.8 million, but statutory (reported) net profit came down to $1.25 million. Adding to the attraction, Lindsay paid a 2-cents-a-share dividend for FY21, up from 1.5 cents in FY20, but the final dividend of 0.5 cents was unfranked (meaning the full-year dividend was 70.6% franked.)
LAU isn’t going to rocket higher like an Imugene – it is another stock for slow-and-steady upward progress.
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