Q: Please comment on the recent 2023 poor financials.
Do you think neo is worth holding, perhaps adding?
Thankyou
Do you think neo is worth holding, perhaps adding?
Thankyou
5i Research Answer:
EPS of 2.8c was a big miss vs estimates of 6.8c; revenue of $128M missed estimates by 4%. EBITDA of $3.09M missed estimates by 74%. Several brokers cut their price targets. Revenue fell 19%. The China slowdown is really hurting the company, with lower rare earth prices and volumes. Cash is still high at $83M (net) but did decline sharply in 2023. The stock is cheap at 11X earnings, and the dividend continues to be paid (6.93%). Based on comments, 2024 'should' be better but this is becoming a show-me story. Consensus calls for a further sales decline in 2024, and much is going to depend on China here. We would consider it a marginal HOLD today, and would not add.