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. On 25 February 2022, NGI confirmed the foreign currency exchange rate of 0.7198 USD/AUD for paying the FY22 interim dividend of A$7.641 cents/share.

• Operational Update: NGI clocked a total statutory revenue of US$68.7 million and an EBITDA of US$14.4 million. The revenue jump was primarily supported by a 224% increase in revenue from reimbursement of fund operating expenses and a US$7.2 million contribution from net distribution from NGI Strategic Portfolio.
• Lighthouse Investment Partners: As of 31 December 2021, the Assets Under Management (AUM) stood at US$13.90 billion relative to US$13.93 billion as of 30 June 2021. The net outflows stood at US$0.15 billion, and performance contribution improved by US$0.12 billion.
• NGI Strategic Portfolio: Portfolio AUM stood at US$38.1 billion in CY20 with a CY21 estimate of US$40.0 billion. Ownership adjusted AUM since acquisition increased by 10% and stood at US$7.2 billion.

H1FY22 Financial Snapshot; Analysis by Kalkine Group

Key Risks and Challenges

With the onset of recent geopolitical stress between Russia and Ukraine, the global capital markets have tanked significantly, manifesting immense volatilities. NGI needs to make intuitive calls for adjusting portfolios’ liquidity amid high market volatilities.

Outlook

The preferred annual minimum distribution to NGI stands at US$17.5 million in FY22, indexed at 3% per annum through FY25. FY26 onwards, NGI will own 100% of cash distribution by FY25 at Dyal. Recent business investments include a 34.1% stake in Longreach Alternatives and less than 10% stake in Grow Investment Group.

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 ~11.006% in the past year. The stock is currently trading at its 52-weeks low of $1.405. 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 decent scenario for the financials sector and potential up-move expectations in capital markets, the company might trade at a slight premium to its peers’ Price/Book Value multiple averages. 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 decent distribution prospects, lucrative business investments, improved top-line, 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 $1.405, as of 08 March 2022, 11:46 AM (GMT+10), Sydney, Eastern Australia. Markets are currently trading in a highly volatile zone due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.

NGI Daily Technical Chart, Data Source: REFINITIV 

WISR Limited

WZR Details

H1FY22 Financial Update: WISR Limited (ASX: WZR) offers loa products for various personal needs and helps consumers pay their debt via its proprietary financial wellness platform.

• Top-Line Performance: Revenue for the period clocked $26.2 million, substantially up by 163% PcP. The company witnessed 22 consecutive quarters of loan growth as total new loan originations increased by 84% to $268 million.
• Bottom-Line Performance: Cash EBITDA stood at a negative $3.8 million, improving 42% over H1FY21. Total portfolio arrears stood consistently low with over 90 days arrears of 0.81%, as reported on 31 December 2021.
• Financial Position: The company stands well capitalized with a cash position of $75.3 million, including $26.3 million in unrestricted cash. Total liquid loan assets available for sale stood at $18.4 million as of 31 December 2021.

Cash Flow Movements for H1FY22; Analysis by Kalkine Group

Key Risks and Challenges

The emergence of geopolitical stress affecting Australian capital markets may reciprocate bad debt build-up. The high regulatory requirements in the consumer finance industry may constrain the business’ liquidity aspects.

Outlook

Total expected credit loss provisioning stood at 2.03% of the loan book and declined from 2.46% as of 30 June 2021, highlighting a build-up in asset quality. In February 2022, proprietary credit score Wisr Score was launched, optimizing the company’s risk assessment.

Valuation Methodology: Price/Sales 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 WZR gave a negative return of ~27.632% in the past year. The stock is currently trading lower than the 52-weeks average price level band of $0.132 - $0.340. The stock has been valued using the Price/Sales multiple-based illustrative relative valuation method and arrived at a target price with an upside of low double-digit (in percentage terms). Considering the decent prospects for the consumer finance industry, the company might trade at a slight premium to its peers’ average Price/Sales multiple. For valuation, few peers like Credit Corp Group Ltd (ASX: CCP), Money3 Corp Ltd (ASX: MNY), Zip Co Ltd (ASX: ZIP) and others have been considered. Given the decent credit quality build-up, technological advancements for risk profiling, decent fundamentals, 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 closing market price of $0.135, down by ~10.00%, as of 08 March 2022. Markets are currently trading in a highly volatile zone due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.

WZR 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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