WSA, ASM & am I too late to buy Calix (CXL)?

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Question asked 20/11/2021

WSA, ASM & am I too late to buy Calix (CXL)?

Hi James and Team, Your insights are very valuable and calming in this volatile market. Questions for Sat- Weekend report. 1. WSA- Western Areas – You mention in Friday’s report – MM believe IGO will acquire WSA in 2022. The big question is at what price. I hold both WSA and IGO. Would you be a holder of WSA until the acquisition is played out or a seller into strength? It has reached a high of $3.41 in Oct 21 and has had a run up this week. Bell Potter has a Sell on WSA and a price target of $2.90. 2. ASM – Australian strategic Materials – Can be quite volatile with large movements up and down in a day. Can I have your view on ASM – It has reached a high of $14.15 this week but today so far has come down about 10% to $12.60. Would you be a holder long term? Do you have a price target on ASM? 3. CXL – Calix – While we can’t always buy all your trade recommendations at the time. – this is one that got away. Well done to MM – your timing was impeccable. Is this still a buy in the long term or has the risk reward diminished? Do you have any valuation on CXL? Thanks, Debbie

Answer

Hi Debbie,

Obviously 3 large questions late on a Friday afternoon so please excuse my brevity towards each:

We like both nickel businesses IGO and WSA at around current levels and we own IGO, by definition WSA as the target would usually be expected to be the stronger, however any deal that happens is likely to be a scrip deal and IGO is the only buyer at the moment so it’s not a competitive process. I think both companies see the strategic rationale of a tie up. We have written that we’re looking to take profit on IGO ~$10.50-$11 and we’ll re-assess if / when that happens.
Metal and oxides business ASM feels fully valued up around $14, its not on our Hit List at present.
Thanks about CXL it has indeed flown out of the blocks, we still regard the innovative environmentally focused mineral processing business as a strong hold but for new buyers, we would advocate waiting for some consolidation of the recent move, buying in the $7-7.50 region and keep some ammunition in reserve in case it dips further. valuation very hard on a stock like this, Bells most bullish with $7.85 PT while our analyst at Shaw has $6.50, although I know he likes it a lot.

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LAST UPDATED 20/11/2021 07:16

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