Iofina Plc. is a ‘Buy’ at the current levels as the stock offers a phenomenal scope of upside! The stock finished trading on the London stock exchange at 13.0p a share, up by 6% compared to the previous close. Yesterday, the stock was one of the top gainers on the bourses and we expect the northward journey to continue. In our last article on Iofina Plc., we had given the target of 20p and the stock did rise from 13.0p to 16.0p respectively. However, it couldn’t breach the resistance of 16.0 p and afterwards headed for a correction. The stock took support at 10.0p and has been rising after its consolidation at the same level. In terms of technical analysis or charting, the stock has surpassed the downward trend line which also confirms the trend reversal and likely bullish trend. Currently, the stock has been trading above its 20 day moving average (DMA), 50 DMA and below 100 DMA of 12.1p, 12.98p and 13.8p respectively. MACD and RSI also confirms the buying, thus traders can initiate fresh longs at the current levels for the target of 23.0p. We revise the target price to 23.0p and the time frame to achieve this target would be 0 to 3 months.
Let’s throw light on the latest financial results of the company. The company announced its financial year 2016 results on 22nd May. As per the results, the revenue increased by 11% year on year to $22.5 m versus $20.3m a year ago. Despite the fall in iodine prices, the company reported gross profit at $2.7m versus $4.3m a year ago. The cash and cash equivalents as on 31st December 2016 was at $2.8 m. However, iodine prices are showing signs of stabilizing and are moving higher from the lows of late 2016. Also, the group remains on track to produce 215-230 MT of iodine in the first half of 2017.
The president and CEO of the company, Mr. Thomas Becker commented on the results, “The Board is pleased with the Company's 2016 performance, which saw revenue increase 11%, record sales of IOflo iodine and record sales of non-iodine derivatives. During the year Iofina and its partners faced regulatory changes affecting brine disposals at Arbuckle disposal wells, and where practical, made improvements to our systems to provide as much iodide rich brine to our production facilities as possible. In a year where iodine prices continued to fall some iodine mines in Chile have now slowed production or closed altogether. Iofina is committed to controlling existing plant operational costs as well as looking to produce at new sites to expand production and reduce our overall production costs. Importantly, in 2016 Iofina successfully renegotiated and reissued the US$20m convertible debt and added a new US$10m debt facility. This will assist the Group in executing its business objectives”
Therefore, based on the latest financial results of the company and strong technical we recommend strong buy on Iofina Plc.