Roth stuck to its Buy rating and $4.25 price target for the Vancouver-based metals producer, which is focused on silver-related mineral properties in China.
In its report, Roth analyst Joe Reagor highlighted the strength of the company's balance sheet, noting that in his view, the company continues to be "significantly undervalued by the market."
"While 2019 was another strong production and cash flow year for SVM, the company continues to be significantly undervalued by the market, in our view," noted Reagor. "We base this belief on the company's strong balance sheet that includes $67.4 million in cash, $47.6 million in short-term investments, over $80 million in investments in other public companies and only $4.5 million in debt."
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In the report, Reagnor noted that thanks to the strength company's balance sheet, Silvercorp has over $1.00 per share in net cash and investments.
"Therefore, on an asset basis only, it trades for less than 1/3 of our DCF (discounted cash flow) valuation. While we acknowledge the company may deserve a jurisdictional discount we are hard pressed to find other mining companies facing similar discounts despite similar jurisdictional risks," noted Roth.
Silvercorp is the primary silver producer in China, with six silver-lead-zinc mines in the Ying mine district in Henan province, as well the silver-lead-zinc Gaocheng (GC) project in Guangdong, China.
On Tuesday, shares of Silvercorp were at C$2.75 in Toronto and at US$2.04 in New York.
Contact Katie Lewis at [email protected]