Navigator Global Investments Limited

NGI Details

Navigator Global Investments Limited (ASX: NGI) is a diversified asset management holding company which operates mainly in the alternative investment, more specifically multi-manager hedge funds solutions.

H1FY21 Performance (For the Six Months Ended 31 December 2020)

The company has recorded 2% YoY decline in the overall revenue during the six months ended 31 December 2020 to $52.74 million as benefit of 166% YoY and 65% increase in performance fee income and reimbursement of fund operating expenses were not enough to offset the 19% decline in management fee income. The strong growth in the performance fee revenue during the period was driven by robust performance in the December 2020 quarter.

Operating expenses during the period rose 12% YoY due to additional bonus expense. Resultantly, EBITDA reduced by 23% YoY and statutory net profit after tax declined by 35% YoY.

The board has declared an interim dividend of 3.5 cents per share and the payment date was 12 March 2021.

Financial Snapshot

Source: Company Reports

Outlook

The company’s robust investment performance in the December 2020 quarter has aided NGI in providing a healthy base to deliver for the rest of FY21. The company is witnessing traction in demand for the equity portfolios as well as platform services, which are likely to aid to the growth momentum for the Lighthouse business.

Meanwhile, the company on 1 February 2021 acquired six minority interests in a top reputable alternative asset manager. It has acquired the same from investment funds managed by Dyal Capital Partners, which is a part of a division of Neuberger Berman. For this acquisition, NGI has made an up-front consideration which includes issue of 40,524,306 ordinary shares and issue of 102,283 convertible notes.  The total face value of the convertible notes stood at $102,283,000.

Meanwhile, the company highlighted that the full impact of the acquisition of the portfolio of minority investments on its EBITDA will be reflected in FY22. Resultantly, the group has guided its FY21 underlying EBITDA to stay in the range of $28 to $31 million, which takes into consideration various non-statutory items along with the estimated impact of the acquisition of the portfolio.

The company anticipates that the portfolio acquisition done in 1 February 2021 is accretive on a cash earnings basis. Its well-established as well as scaled platforms have placed the company in better position to deliver long-term growth.

Valuation Methodology: P/BV Based Relative Valuation (Illustrative)

Stock Recommendation

The stock of NGI has made a 52-week low and high of $1.13 and $2.51, respectively. Notably, the stock is trading towards the 52-week lower levels.

We have valued the stock using P/BV multiple-based illustrative relative valuation method and have arrived at a target price which reflects a rise of low double-digit (in % terms). We believe that the stock might trade at a slight premium to Price/BV Multiple (NTM) (Peer Median) considering the traction in demand it is witnessing for the equity portfolios as well as platform services.

Thus, we give a “Speculative Buy” recommendation on the stock at the current market price of $1.505 per share, up by 1.346% on 29^th March 2021.

NGI Daily Technical Chart (Source: Refinitiv (Thomson Reuters))

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