NEO Battery Materials Ltd., a junior resource company, focuses on the exploration of battery metals in North America. The company holds interests in various mining claims covering 467 hectares located in Golden, British Columbia. It also focuses on developing silicon anodes. The company was formerly known as Pan Andean Minerals Ltd. and changed its name to NEO Battery Materials Ltd. in March 2021. NEO Battery Materials Ltd. was incorporated in 2006 and is headquartered in Vancouver, Canada.

Canada

NEO Battery Materials Ltd.

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. 

NBM.V reported revenue of CAD 0mn in the last 12 months, down 0% from FY23. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS grew 99% from FY23 to CAD -0.04.

The stock's performance has been mixed in the past six months, with growth following a decline. There is no clear price trend compared to its global peers from the same sector and industry (as shown above). The stock has outperformed this peer group by 79ppts over past six months and grown 8ppts slower in the past month. This is largely true for peers from the same country and sector. With respect to the stock's valuation against its peers, its overall price performance is 'fair'.

NEO Battery Materials Ltd. reported a return on equity (RoE) of -151.6% in the last 12 months, down from -66.3% in FY23. 

Another important profitability metric, return on assets (RoA), amounted to -116.8% in the last 12 months, a decrease from -47.6% in FY23. 

In the last 12 months, the return on capital employed (RoCE) declined to -135.9%, below the peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been -7.5 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.

NBM.V 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 relatively stable 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, negligible return on capital, inadequate interest coverage, and poor cash flow generation. We note an favourable capital structure, among the positive credit factors. 

In highly turbulent market conditions, NBM.V 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, NBM.V 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 greatly overvalued relative to its peers. 

NEO Battery Materials Ltd.

CA$ 0.73

2

NEO Battery Materials Ltd.

CA$ 0.73

2

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Profitability factor

Risk / Profitability

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Profitability factor

CA$ 0.73

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