PAC PARTNERS - Revised Equity Research 05FEB2021
INVESTMENT VIEW – BUY. PT $2.83/SHABR is a unique company on the ASX with few comparable peers. A compelling case can be made for investment exposure of both borates and SOP. We like both markets but see the largest upside in borates given the increasing high-end use, geopolitical supply risks, and only a handful of new near-term producers. The EBITDA margins ABR is forecasting to deliver once in full production are material and we can see ABR being many multiples of the current price if these forecasts come to fruition. Even considering the recent share price rally, up 91% in the last three months, we believe ABR remains under the radar for the majority of investors due to the less understood and uniqueness of the borate market. We see strong news flow in 2021 with first borate production, further crop trial results, possible offtake agreements, US secondary listing and potential inclusion in the ASX300. With production in sight and construction/execution risks reducing we increase our price target to $2.83/sh (previous $1.76) and maintain our buy recommendation.
UPCOMING CATALYSTS
Secondary Listing – Mid 2021
Given ABR operations, customer base and head office are US based, ABR are progressing with a secondary listing in the US. ABR believe given strong US investor appetite for industrial mineral companies, ABR will be rewarded with a strong re-rating on the back of a successful secondary listing.
First Boric Acid Production – Q3 2021
ABR is fully funded and progressing the construction of Phase 1A. Achievement of first boric acid production is expected in Q3 2021.
Offtake/Product Marketing Updates – Mid 2021
There has been a concerted effort on ABR’s behalf not to rush into offtake contracts for borates and/or SOP. A dedicated product marketing push has been accelerating in recent months and we could see news regarding offtake agreements prior to first production in 2021.
