QX Resources Limited engages in the exploration and exploitation of mineral properties in Queensland and Western Australia. The company primarily explores for gold and base metals, including nickel. The company was formerly known as Hipo Resources Limited and changed its name to QX Resources Limited in October 2020. QX Resources Limited was incorporated in 2010 and is based in West Perth, Australia.

Australia

QX Resources 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. 

QXR.AX reported revenue of AUD 0mn in the last 12 months, down 100% from FY23. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS fell 74% from FY23 to AUD -0.00.

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 16ppts over past six months and grown 64ppts faster in the past month. At the same time, the stock's performance relative to its the peers from the same country and sector is different. The stock outperformed these peers by 20ppts over the past six months and grew 67ppts faster in the past month. With respect to the stock's valuation against its peers, its overall price performance is 'fair'.

In the last 12 months, the return on capital employed (RoCE) declined to -14.5%, below the peers. 

Another important profitability metric, return on assets (RoA), amounted to -13.9% in the last 12 months, a decrease from -13.4% in FY24. 

QX Resources Limited reported a return on equity (RoE) of -14.5% in the last 12 months, down from -14.3% in FY24. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been -9.1 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.

QXR.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 very unstable and is 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, slow historical revenue growth, bleak profitability, negligible return on capital, poor working capital management, and inadequate interest coverage. We note low margin volatility and an favourable capital structure, among the positive credit factors. 

In highly turbulent market conditions, QXR.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, QXR.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 undervalued relative to its peers. 

QX Resources Limited

A$ 0.01

3

QX Resources Limited

A$ 0.01

3

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

A$ 0.01

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