Company Overview: Northern Star Resources Ltd (ASX: NST) is an Australia-based gold mining company which is involved in the exploration, development, mining and processing of gold deposits and the sale of refined gold. The company’s projects are in prospective and low sovereign risk regions of Australia and North America.
NST Details
Decent Leverage Levels to Aid Business Growth: The company has gold assets located in Tier-1 jurisdiction. NST’s business strength is backed by a robust and flexible balance sheet. This was evident by a leverage ratio of less than 0x and gearing of 5% (maintained below the target range of 20%) in 1HFY22.
Insights of Q3FY22: The below picture gives an overview of the company’s performance:
Source: Analysis by Kalkine Group
Business Update: The following picture summarizes recent business updates:
Source: Analysis by Kalkine Group
Financial Summary: The below picture showcases the company’s performance in 1HFY22:
Source: Analysis by Kalkine Group
Top 10 Shareholders: The top 10 shareholders together form around 30.19% of the total shareholding. BlackRock Investment Management (UK) Ltd. and Van Eck Associates Corporation. are holding a maximum stake in the company at ~6.19% and ~5.65%, respectively, as also highlighted in the chart below:
Top 10 Shareholders (Source: Analysis by Kalkine Group)
Key Metrics: During 1HFY22, the company recorded a current ratio of 1.94x against 1.68x in 1HFY21. Debt to equity for the half year period improved to 0.08x as compared to 0.22x in 1HFY21.
Liquidity & Leverage Profile (Source: Analysis by Kalkine Group)
Key Risks: The below picture outline the key business risks.
Source: Analysis by Kalkine Group
Outlook: The company has not made any change to guidance for its Australian Operations, which contributes to ~85% of the Group portfolio. NST believes that Pogo is likely to operate at a 2H annual run rate of ~240koz.
Source: Analysis by Kalkine Group
Valuation Methodology: P/E Multiple Based Relative Valuation (Illustrative)
Source: Analysis by Kalkine Group
*% Premium/(Discount) is based on our assessment of the company’s NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.
Stock Recommendation:
Markets are trading in a highly volatile zone currently due to certain macroeconomic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.
NST Daily Technical Chart, Data Source: REFINITIV
Note 1: The reference data in this report has been partly sourced from REFINITIV
Note 2: Investment decisions should be made depending on the investors’ appetite for upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the analysis has been achieved and subject to the factors discussed above alongside support levels provided.
Technical Indicators Defined: -
Support: A level where-in stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest.
Resistance: A level where-in stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest.
Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.
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