Loyal Lithium Limited operates as a lithium-led battery minerals and technology company. It holds interests in the Brisk and Trieste lithium projects are located in Quebec's James Bay Lithium District; and the Scotty Lithium Project is located 189 km northwest of Las Vegas and 517 km from Reno, Nevada, the United States. The company was formerly known as Monger Gold Ltd. Loyal Lithium Limited was incorporated in 2020 and is based in Peppermint Grove, Australia.

Australia

Loyal Lithium Limited

Basic Materials

The company does not pay dividends at all, or it pays them sporadically. There have only been a few years with dividend payments in the past ten years. 

LLI.AX reported revenue of AUD 1mn in the last 12 months, up 752% from FY23. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS fell 100% from FY23 to AUD 0.00.

Over the last six months, the stock performance has varied, with an increase following a drop. When measured against its worldwide peers from the same industry (as shown above), the stock has been weaker, underperforming by 42ppts. This is equally valid for peers from the same country and industry. Given the stock's valuation versus its peers, its total price movement is slightly unfavourable.

The company has reported very poor EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to -3395.7% in the last 12 months, a decline from -2122.9% in FY23. 

Historically, LLI.AX has reported very poor net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled -3324.1%, down from -2124.2% in FY23. 

Loyal Lithium Limited reported a return on equity (RoE) of -17.4% in the last 12 months, up from -61.9% in FY23. 

Another important profitability metric, return on assets (RoA), amounted to -16.8% in the last 12 months, an increase from -58.1% in FY23. 

In the last 12 months, the return on capital employed (RoCE) grew to -17.4%, below the peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been -10.8 in the past several years. This ratio implies a fragile shareholder value creation. 

The institutional, legal, and compliance risks associated with the company's country are minimal. In combination with stringent business standards, shareholder rights are very highly protected.

LLI.AX has very poor trading liquidity. It will take considerable time for the average private investor to sell a common position under normal market conditions. Liquidity is unstable and becomes extremely unfavourable on the days with the lowest activity. The trading volume mostly stays the same even under highly turbulent market conditions. Another factor to consider is the substantial number of days with zero trading volumes, i.e., without any ability to sell a position. The stock has a tiny market capitalisation, which usually makes its trading liquidity erratic and unpredictable. 

No other major risks have been identified.

The risk of default is high. Among the negative credit factors, we point to weak positions in its industry, bleak profitability, negligible return on capital, and inadequate interest coverage. We note resilient historical revenue growth, low margin volatility, and an favourable capital structure, among the positive credit factors. 

In highly turbulent market conditions, LLI.AX is exceptionally volatile. In other words, the stock will be among the worst-performers in times of extreme market volatility or shocking company news. Standalone, the worst-day losses (less than 1% of the time) will likely be critical. 

In normal market circumstances, LLI.AX is exceptionally volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will change quite unpredictably. The stock's losses on its worst days (less than 1-5% of the time) will range from critical to immense. 

Based on key historical and expected multiples, the stock is fairly valued relative to its peers. 

Loyal Lithium Limited

A$ 0.07

3

Loyal Lithium Limited

A$ 0.07

3

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

A$ 0.07

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