This report is an updated version of the report published on 16 April 2025 at 12:35 PM AEST.

Australian Strategic Materials Limited (ASX: ASM)

ASM is an Australia-based materials technology company primarily producing speciality metals and oxides from the Dubbo Project.

Recommendation Rationale – Sell at AUD 0.695

• Financial Highlights: ASM reported a 48.72% YoY decline in revenue to AUD 1.13mn in 1HFY25, down from AUD 2.21mn in 1HFY24. The decrease was primarily driven by lower sales of KMP metals, reduced pastoral income, and volatility in rare earth prices. The company’s other income also decreased to AUD 1.07mn in 1HFY25, compared to AUD 1.49mn in 1HFY24. As a result, the company reported a loss after income tax of AUD 13.94mn in 1HFY25, compared to a loss of AUD 8.59mn in 1HFY24.
• Trading Near the Resistance: ASM’s stock has surpassed its R2 level recommended on 15 April 2025. Therefore, share price can face resistance at the current levels.
• Overvalued Multiples: On a forward 12-month basis – key trading multiples (EV/EBITDA, Price/Earnings) are higher than the average of Basic Materials sector.
• Market Risk: For ASM, the risks associated with US-China trade tensions and potential rare earth tariffs necessitate vigilant monitoring of global trade policies. While the company's integrated structure helps to lessen some of these threats to market access and its supply chain, the external environment remains critical.
• Technical Commentary: On the daily chart, ASM prices are currently approaching a horizontal trendline resistance zone. The 14-period Relative Strength Index (RSI) is hovering around 86.74, indicating overbought conditions. Despite this, the stock remains above the 21-period Simple Moving Average (SMA), a trend-following indicator that may offer support.

ASM’s Daily Price Chart

Considering that the stock has surpassed its R2 level, share price movement, current trading level, and risks associated, the share price can face consolidation at the current levels. Hence, a ‘Sell’ recommendation is given on the stock at the current price of AUD 0.695, as of 16 April 2025, at 11:50 AM AEST).

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical issues prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is neither an indicator nor a guarantee of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is 16 April 2025. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided have been achieved and is subject to the factors discussed above.

Note 4: Kalkine reports are prepared based on the stock prices captured either from REFINITIV or Trading View. Typically, REFINITIV or Trading View may reflect stock prices with a delay which could be a lag of 25-30 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level at which the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: In general, it is a level to protect further losses in case of any unfavourable movement in the stock prices.