FinnCap analyst Jonathan Wright has upgraded his targets for iodine and specialty chemical manufacturer Iofina PLC (AIM:IOF, OTC:IOFNF) following what he described as solid interim results, released this morning.
Iofina trades at a discount according Wright’s target which is pitched at 33p per share, versus the current market price of 22.17p.
Wright, in a note, said: “Solid interim results from Iofina, with strong cost controls delivering higher profitability despite higher energy and input costs.
“Brine water supplies have stabilised, production is on track, the pricing environment remains strong, near-term growth projects are fully funded and Iofina has a growing cash position. Iofina is finding its stride.
“After years of cost-cutting and restructuring, Iofina’s ‘prudent growth’ strategy is expanding and evolving, with ambitions to double production over the next 3-5 years alongside the pursuit of complementary strategic growth opportunities in specialty chemicals.”
The analyst added: “Strong iodine market fundamentals, a dollar-based business, a strong balance sheet and the potential for a re-rating make Iofina a standout in volatile markets.”
Iofina, this morning, reported an increase in underlying earnings (EBITDA) and said it remains on track to meet full-year expectations.
EBITDA increased 6% to US$3.7mln in six months to 30 June 2022, although revenue was down 4% to US$19.2mln, with the group putting this down to an exceptional performance last year where it was able to sell excess inventory built up during the Covid-19 pandemic.
For the rest of the year and beyond, Iofina said it remains committed to organically increasing iodine production and remains on track to deliver second-half targets of 255-275 metric tonnes (MT) of crystalline iodine.
"Looking to the second half, on current output, we are confident of producing 255-275MT of crystalline iodine, with brine supplies now stabilised following the saltwater disposal maintenance work undertaken by one of our oil and gas partners,” said president and chief executive Dr Tom Becker.
“Market demand for raw iodine and our speciality products remains strong despite wider macroeconomic concerns. As such, the board anticipates meeting full-year expectations.”
Additionally, it expects to have a new production plant operating in the second quarter of next year which will make a “significant contribution” to the second half of 2023.
Iofina said it increased its cash position to US$4.7mln from US$1.7mln, while cutting its debt position to US$2.8mln from US$7.2mln.
Profit before tax fell to US$2.6mln from US$3.5mln, with last year’s figure including a one-off US government payment protection program loan of US$1.1mln.