Navigator Global Investments Limited

NGI Details

This report is an updated version of the report published on 14^th June 2022 at ~3:55 PM GMT

Recent Development: Navigator Global Investments Limited (ASX: NGI) is an investment management and fund operations company that is engaged in providing investment management-related products and services to investors globally.

• NGI has started fully underwritten placement to eligible institutions and sophisticated investors to raise A$47mn and started a non-underwritten Shares Purchase Plan (SPV) to raise A$10mn.
• NGI has signed a definitive agreement of US$100mn to acquire a passive ownership interest in Marble Capital, with the aim to support its near-term growth initiatives of Marble Capital.
• NGI’s internal analysis shows that alternative assets are capturing a greater market share amid the volatility in the traditional market. The alternative asset management industry is expected to grow by 9% CAGR from 2021 to 2025 and reach $17 trillion.
• Historically, from June 2017 till Dec 2021, the total AUM of NGI recorded a growth rate of 7.6% CAGR.

NGI Asset Under Management, (Source: Analysis by Kalkine Group)

Key Risks: NGI undertakes a due diligence process with respect to any proposed investment, but there is a risk of reliance on information provided for due diligence. The company also faces the underwriting risk of termination of the placement agreement under uncertain conditions. There are other risks like liquidity risk, legal risk, access to future capital, competition, and brand reputation.

Outlook: NGI announced the upgraded earning guidance for FY22 and stated adjusted EBITDA to be in the range of US$43-45mn, and adjusted NPAT to be between US$33-35mn. The earning upgrade is driven by the outperformance from NGI strategic portfolio.

Valuation Methodology: P/B 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 is currently trading near to its 52-week low level of $1.250, providing a decent opportunity for accumulation. The stock has been corrected by ~12.08% in the past month. The stock has been valued using a Price/Book Value multiple-based illustrative relative valuation and arrived at a target of low double-digit upside (in % terms). The company can trade at a slight discount to its peers, considering the inflation impacting financial market returns, interest rate hikes, and dilution of existing shares, etc. For valuation, peers such as Pendal Group Ltd (ASX: PDL), Centuria Capital Group (ASX: CNI), Pacific Current Group Ltd (ASX: PAC) have been considered. Given the AUM growth, expected FY22 earnings growth, current trading levels, expected upside in valuation, and key risks associated with the business, we recommend a ‘Speculative Buy’ rating on this stock at the current market price of $1.270, as of 14^th June 2022, 1:05 PM (GMT+10), Sydney, Eastern Australia.

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.

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 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 the 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 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 price.

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