This report is an updated version of the report published on 23 January 2024 at 2:31 PM AEDT.

Chrysos Corporation Limited (ASX: C79)

C79 specialises in the advancement and provision of mining technology. Among its offerings is PhotonAssay, a cutting-edge technology used for analysing gold, silver, copper, and various other elements.

Recommendation Rationale - Sell at AUD 5.22

• Continued Losses in Profitability: Despite strong revenue growth, Chrysos still reported a loss in FY24 (Profit attributable to owners: AUD 704k), which is a concern. The company has not yet achieved consistent, sustainable profitability.
• Technical Standpoint: Given the RSI of around 65.07, the stock is approaching overbought conditions. This could be a sign that the price may have risen too quickly, and a short-term pullback or correction could be imminent.
• Negative Return on Capital Employed (ROCE): The company's return on capital employed is negative at -1.29% in FY24, following a negative return of -2.09% in FY23. This indicates that Chrysos is not generating sufficient returns from its investments and capital, which could be a red flag for investors looking for strong capital efficiency.
• Exposure to the Mining Sector: The company's core technology, PhotonAssay, is tied to the mining industry, which is inherently volatile. Any downturn in global mining operations, commodity prices, or a shift in industry preferences could affect Chrysos' customer base and demand for its products.

C79 Daily Chart

C79 Daily Technical Chart, Data Source: REFINITIV

Valuation Methodology: Price/Cash Flow Approach (FY Jun'25E) (Illustrative)

C79 is expected to trade at a premium compared to its peers considering a 69% year-over-year revenue growth in FY24, PhotonAssay™ technology, and strategic partnerships with major players like Barrick Gold and SGS. For conducting the valuation, the following peers have been considered: TechnologyOne Ltd (ASX: TNE), Objective Corporation Ltd (ASX: OCL), and Life360 Inc (ASX: 360).

Considering the rally in share price movement, current trading level, and risks associated, the share price can witness resistance at the current levels. Hence, a ‘Sell’ recommendation is given on the stock at the current market price of AUD 5.22, as of 23 January 2025, at 2:05 PM AEDT.

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 23 January 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 has 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 a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.