Navigator Global Investments Limited

NGI Details

H1FY22 Financial Update: Navigator Global Investments Limited (ASX: NGI) is an asset management company catering for investors globally by providing investment management products and services through Lighthouse Investment Partners, LLC and six other alternative assets management subsidiaries.

• Topline Update: Management fees dipped by 1% PcP and clocked US$37.2 million. The average AUM for H1FY22 stood at ~US$14.0 billion, up by 15% PcP. Performance fees revenue dropped by 10% and clocked US$8.8 million. NGI Strategic distributions received US$7.2 million in cash to 31 December 2021.
• Bottom-Line Update: In H1FY22, adjusted EBITDA jumped by 33% PcP and clocked US$20.0 million. It was primarily driven by Net distribution from NGI strategic portfolio, promoting growth in operating activities.
• Key Interim Highlights: NGI is improving its market demand for proven and established alternative investment managers. Inflation and changing interest rate environment may deliver substantial opportunities for hedge fund strategies amid the global financial crisis.

H1FY22 Financial Snapshot; Analysis by Kalkine Group

Key Risks and Challenges

The recent geopolitical tensions between Russia and Ukraine have substantially affected the global capital markets, delivering immense volatilities. NGI needs to make strong calls for portfolios’ liquidity adjustments considering high market volatilities.

Outlook

NGI Strategi Portfolio has delivered a good performance in CY21, receiving a full preferred distribution amount of US$17.5 million for FY22. The portfolio has been a solid start to NGI’s long-term strategic holdings. Directors determined unfranked dividends per share of US$5.5 cents paid on 11 March 2022.

Valuation Methodology: Price/Book Value 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: The stock of NGI gave a negative return of ~20.00%% in the past year. The stock is currently trading lower than the 52-weeks average price level band of $1.440 - $2.040. The stock has been valued using the Price/Book Value multiple-based illustrative relative valuation method and arrived at a target price with an upside of low double-digit (in percentage terms). Considering the recent geopolitical tensions and high market volatility, the company might trade at a slight discount to its peers’ Price/Book Value multiple average. For valuation, few peers like Pacific Current Group Ltd (ASX: PAC), Insignia Financial Ltd (ASX: IFL), Pendal Group Ltd (ASX: PDL) and others have been considered. Given the outperformance in NGI Strategic Portfolio, AUM sustaining elevated levels, increased adjusted EBITDA, current trading levels, upside indicated by valuation, and key risks associated with the business, we give a “Speculative Buy” recommendation on the stock at the current market price of $1.450, as of 24 February 2022, 01:55 (GMT+10), Sydney, Eastern Australia. Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

NGI 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 depend on the investors’ appetite for upside potential, risks, holding duration, and previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the valuation has been achieved and is subject to the factors discussed above.

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and 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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