SQM launches new ratings service

Yasmine Raso

Senior Journalist, Financial Newswire

2 May 2023

SQM Research has boosted its research and ratings offerings with the release of ‘Shares Professional’, providing financial advisers with ratings of the Australian Securities Exchange (ASX) top 200 listed companies.

The ratings use SQM’s five-star model and are the result of a quantitative research process that also seeks to identify investment opportunities in the medium to long-term.

The median rating for all ASX listed companies currently stands at 2.20 stars, where a ‘neutral’ rating is approximately 2.50 stars aggregated across the three factors that contributed to the research process: quality, valuation and momentum.

The research house’s top five rated companies were Stanmore Resources (SMR) with an overall rating of 3.75, Wistech Global (WTC) with an overall rating of 3.65, AUB Group (AUB) with an overall rating of 3.61, Perseus Mining (PRU) with an overall rating of 3.59 and Cochlear with an overall rating of 3.38.

The bottom five rated companies were HomeCo (HDN) with an overall rating of 0.99, APM Human Services (APM) with an overall rating of 1.11, The Star Entertainment Group with an overall rating of 1.26, NexGen Energy with an overall rating of 1.30 and BSP Financial Group with an overall rating of 1.31.

“The introduction of ratings on Australian listed companies now completes our investment market research offering,” SQM Research’s Managing Director, Louis Christopher, said.

“As such, SQM Research is a full-service research organisation providing ratings, data and insights into direct equities, multi strategy SMA models, single strategy funds on all asset classes; and of course, real estate.

“We provide these services while keeping our conflicts to a bare minimum. We will never run a funds management business. We will never be a broker, nor a real estate agent. We will always put investors first and support the financial planning profession in that mandate.”

SQM also released the methodology behind its new offering, explaining the factor of quality as “the company has a better than average track record of growing the business, riding out tough times, adding shareholder value and therefore the increasing the bottom line, which usually feeds into the stock price (all else equal) over time”; valuation as “The stock has more relative price upside than a relatively expensive stock, and less room for share price falls in the case of bad news coming through, a decline in market sentiment, or a general market correction (a margin of safety)”; and momentum as “The market shows a favourable sentiment towards the stock, e.g. more buyers (demand) than sellers (supply) lifting the stock price in recent periods”.

Christopher and former Head of Strategic Research for a van Eyk Group subsidiary, Otto Rieth, will manage the ratings service which is now available via a subscription model for financial advisers.