Member Since 8 December 2015
Last Seen: Fri 11:09
Posted on 4 May 2017, 12:58 AM

Iofina Plc, a value buy with a potential of upto 40% return in short term

Topics: Analysis
Other Insights on Related Shares: IOF.L
Related Shares: Iofina Plc Share Price

Iofina plc. is a holding company. The Company is involved in the exploration and production of iodine, iodine specialty chemical derivatives, produced water and natural gas. Its segments are Iodine and Iodine Derivatives, and Montana. The activities of the Iodine and Iodine Derivatives segment include the production of raw iodine, and the production of iodine derivatives and other non-iodine based chemical derivatives. The Montana segment includes the Atlantis Field project for the exploration and production of natural gas, iodine and water for use in various applications, and the Montana Water Depot project, which includes volumes of water retrieved, stored and shipped to customers in close proximity to be used mainly for fracking. It is also engaged in recycling of iodine using iodinated side-streams from waste chemical processes in Europe, North America and Asia. It’s Wellhead Extraction Technology (WET) and WET IOsorb methods enable the co-production of iodine from brine.

Iofina Plc. is a compelling ‘Buy’ at the current price level as the stock is surely undervalued in terms of valuation. The stock finished trading on the London Stock exchange on 3nd May at 12.8p a share, up by 1.8% compared to previous close. It seems that the stock would continue to rally as it has had its share of correction. The stock has been trading above its 20 day moving average (DMA), 50 DMA and 100 DMA of 10.9p. 10.3p and 9.9 p respectively. This is also a bullish indicator that the stock has surpassed the moving averages as well. In terms of technical analysis or charting, the daily chart has been making green marubozu candles which also points out towards the continuing rally of the stock. The immediate resistance for the stock is at 13.0p, any breakout above 13.0p would surely means fresh highs of the stock. Therefore, traders or investors need to keep an eye on the respective levels of the stock and accordingly initiate fresh positions. The weekly chart points out the formation of rounding top pattern which would be completed at 20.0p. Therefore, we set a short term target of the stock at 20.0p and the time frame to achieve this target would be 0 to 2 months.

A few weeks back, the company announced its update on activities in the first quarter of 2017. Iofina produced 118.7 metric tonnes  (MT) of crystalline iodine from its five Oklahoma based IOsorb plants. Water quality issues and the recently reported brine supply issue at its IO3 plant slightly affected its total output versus Q1 2016 (Q1 2016: 124.6MT). The company reported that its operating IOsorb plants are currently performing well and producing crystalline iodine at forecast rates. The Company expects to produce 215-230 MT of crystalline iodine in H1 2017 without any further contribution from IO3 during that period. Also,  Iofina Chemical (IC) performed well in Q1. Sales of and demand for non-iodine halogen derivatives were especially strong at IC in Q1 2017. Another important thing is that the prices of iodine and iodine based derivatives were at a low late in 2016 and now have seemingly stabilized and recently have moved slightly higher. Iofina anticipates iodine prices will gradually rise in 2017 based on continued demand trends and the reported reduced iodine production output from some Chilean based iodine producers.

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