Winsome Resources Limited, together with its subsidiaries, engages in the exploration and development of lithium in Canada. The company holds 100% interest in the Adina flagship project; and Cancet project comprising 395 claims, covering an area of 20,000 hectares, located in Quebec, Canada. It also holds 100% interest in the Sirmac-Clappier project that comprising 39 claims, covering an area of 1,931 hectares; and the Tilly project comprising 91 claims, covering 47 square kilometers, located in Quebec, Canada. The company was incorporated in 2021 and is based in West Perth, Australia.

Australia

Winsome 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. 

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). It has underperformed this peer group by 57ppts over six months and grown 28ppts 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 slightly negative.

The company has reported very poor EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to -145.8% in the last 12 months, a decline from 79.4% in FY24. 

Historically, WR1.AX has reported very poor net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled -135.9%, down from -75.5% in FY24. 

In the last 12 months, the return on capital employed (RoCE) declined to -7.2%, below the peers. The consensus estimate for FY25 for RoCE is 7.6%, again behind the peers. 

Another important profitability metric, return on assets (RoA), amounted to -6.9% in the last 12 months, a decrease from -4.1% in FY24. The market analysts predict that RoA will be -7.7% in FY25, again weaker than its peers. 

Winsome Resources Limited reported a return on equity (RoE) of -8.2% in the last 12 months, down from -5.1% in FY24. The market consensus projects an RoE of -9.2% in FY25, again behind its peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been -0.3 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.

WR1.AX has very poor trading liquidity. It will take at least a day or two for the average private investor to sell a common position under normal market conditions. Liquidity is usually stable and remains mildly favourable on the days with the lowest activity. However, please consider that under highly turbulent market conditions, the trading volume tends to decrease significantly. 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 moderate. We note low margin volatility and an favourable capital structure, among the positive credit factors. Among the negative credit factors, we point to weak positions in its industry, bleak profitability, and negligible return on capital.

In highly turbulent market conditions, WR1.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, WR1.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. 

Considering past and projected metrics, the stock is moderately 'expensive' compared to its peers. Specifically, the stock is overvalued on EV/EBITDA. 

Winsome Resources Limited

A$ 0.19

2

Winsome Resources Limited

A$ 0.19

2

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A$ 0.19

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