Category: ASX research

The Northern Star Resources Limited(NST) is an Australian gold producer. The NST owns three gold production sites Kalgoorlie, Yandal, and Pogo. The NST is targeting to reach 2Mozpa by 2027 with Kalgoorlie (1.1M), Yandal (600k), and Pogo (300k). They are on the track. NST is mining 1.6MOz in group production now. They have updated their quarterly report on 10th February so I will update some information here.

\A$m	FY17	FY18	FY19	FY20	FY21	FY22-1H
Revenue	869	964	1401	1972	2761	1807
EBITDA	426	447	489	798	1138	926
Net income	189	194	155	258	1033	261
Share of outstanding	613	615	645	695	1164	1164
EPS = NPAT/Share of outstanding	0.31	0.32	0.24	0.37	1.14	0.224
Dividend (dollar)	0.12	0.095	0.135	0.27	0.19	0.1

In the last five years, the company has gradually increased its revenue and profits. FY22-1H shows it is still the same trend before the gold price jumped to the 1900USD/oz level. If the gold price continues, it will be better in FY22-H2. The share of outstanding increases in FY21 because of the M&A of the gold mining company Saracen. 2021 might be an exceptional return we might need to watch. The share price now is 10.80@March 13th 2022 so the P/E ratio is 24.1 or so by using the number FY22-H1 times 2, so I believe is the share is now a bit overvalued compared to the end of FY21. But the price has come back because the gold price has risen since the war. I believe that NST bought Saracen in 2020 and 36% of their shares came from Saracen. I have felt Saracen shareholders didn’t like the deal because AISC of Saracen was much better.

\A$m	FY17	FY18	FY19	FY20	FY21	FY22Q1	FY22Q2	FY22-1H
AISC (A$/oz)	1,013	1029	1296	1,496	1483	1594	1631	1613
Gold sold k oz/	526	570	841	900	1595	386	393	779
Average gold price realized (A$/oz)	1,673	1704	1764	2208	2277	2345	2429	2388
Operating cashflow (A$m)	350	353	379	710	1077			622
Mineral Resource Moz	10.2	15.9	20.8	31.8	56.5	—	—	—

The AISC is the company that reported All-in Sustain Costs. The gold price is about 1700-1900USD/oz since July 2020 with roughly AUD/USD = 0.73, after Russia’s invasion of Ukraine, the gold price rose to around 2000USD (= 2739 AUD) in March 2022. The gold price on average in FY22-2 is about 2388 AUD/oz. I think the current level of gold price and AUD/USD continues the NST can make money comfortably at the FY21 year level. However, I hope they can do better on the cost down as they could do a few years ago so they can make more money. The AISC is increasing. Hope I can see that progress a few years after they took over the Saracen. The gold sold is going 1.6 Moz level now jumped at FY21 and they are aiming at the production of 2 Moz by 2027. The mineral resources are increasing over the 5 years and jumped at FY21 because of the merger with Saracen and also their explorations.

They aim at 1550-1650koz of Gold production (usually the same level as gold sold ) with 1,475-1,575AUD/tons of AISC (but actual for FY22-H1 = 1613). So if they can run it as they promised and the average gold price realized, it should be 1.6M*(2602-1613) = 1240 million. The EPS should be the same level as FY21 which is 1.07. If I want P/E = 10, the NST share price is 10.7, not it is below the share price of 10.8@March 13th 2022. The price is reasonable now. Also, they are trying to reach 2MOz of gold production by 2027, a 25% increase over 5 years. But this needs to be analysed carefully and depends on the gold price and production continues. However, since governments around the world are printing money so much because of the pandemics and the price has jumped after the war in February 2022, I believe the gold price should go up while it could break historical the highest level about 2035 USD/oz. So you might want to either put gold or NST to protect your financial assets during this difficult time.

\A$m	FY17	FY18	FY19	FY20	FY21
Current Assets	486	558	454	1110	1840
Current Liability	175	200	218	638	771
Current ratio	2.78	2.79	2.08	1.73	2.39
Non-current liability	135	195	310	1029	2499
Total assets	924	1220	1640	3810	11250
Total liability	310	395	529	1670	3270
Total equity	614	821	1110	2140	7980

Did I miss something else? The debt of the company. Operational-wise, the company is doing great for manageable liability. I am a bit concerned about the increase in the last two years. On the other hand, total assets also jumped. I am not worried about the operations at the moment. In FY22-H1, NST made a net repayment of A$361 of corporate bank debt.

Currently, the Northern Star is the second largest gold mining and exploration company in ASX after Newcrest Mining (ASX: NCM). The NCM is roughly double the size of NST now. Maybe next time update, I will compare these two companies. Also, I could take a look at their cashflows.

A Famous book called TOP STOCKS by Martin Roth in Australia which just had its 28th edition last September describes that the Commonwealth Bank of Australia is the only company that has met the criteria for the book over 28 years. That means it is publicly listed during the time and it is a top 500 Australian company. They should have 28 years of profits and dividend payments. In addition to these, the ROE of the company exceed more than 10% and a debt to equity ratio is less than 70% over the 28 years. I believe the company anyone who is interested in Australian share has to look into. The company is based in Syndey and was founded in 1911. It is one of Australia’s largest banks, provides home loans, personal loans, credit cards, and is the largest holder of deposits. Commonwealth Securities is Australia’s largest online stockbroker. On the other hand, anyone in Australia knows this bank and can look at it so it can be already expensive to buy. Let’s see the position of the company.

	2017	2018	2019	2020	2021
Operating income (A$m)	25386	24914	23579	23761	24156
Net interest income (A$m)	17543	18342	18224	18610	18839
Operating expenses (A$m)	10626	10995	10824	10895	11359
Net income (A$b)	9.93	9.33	8.57	9.59	10.18
Earning per share (EPS) (cent)	563.4	510.6	465.78	421.50	488.59
Dividend (cent)	429	431	431	298	350
Net tangible assets per share (A$)	30.79	33.14	34.88	36.8	40.49
Net interest income to total income (%)	30.9	26.4	22.7	21.7	22.0
Cost to income ratio (%)	41.9	44.1	45.9	45.9	47.0
ROE (%)	15.7	13.7	12.0	10.3	11.5
ROA(%)	1.0	0.9	0.8	0.7	0.8

As Top Stock describes, banks are somewhat different from other companies. EBIT and debt to equity ratio have little relevance for them. These numbers are taken from the Top Stocks 2019-2022 except for net income.

Here, operating income is used instead of sale revenues (=total interest income – total expense + other income such as bank fees, fund management fees and income from other businesses). Banks borrow money and lend it to businesses, homebuyers, other borrowers, the difference is knowns as net interest income. Operating expenses are all the costs of running the bank.

The numbers are surprisingly flat. I am not sure how we treat 2020 and 2021 but the Australian economy is flat so I think it is reasonable. But at least, they are stable. EPS are not good last three years. The bank pays out 71-72% of EPS as dividends to investors in 2020 and 2021.

Net tangible assets per share are the theoretical value of the company per share. We could see this is higher than the actual price but if we want to see this is reasonable, maybe I would need to compare with other banks, I will need to do this another time. The net tangible assets per share of CBA is gradually growing last 5 years even under the COVID-19.

Net interest income to total income (%) shows how the bank diversifies the income source other than traditional banking business, so surprisingly the CBA has only 20% or so in the last three years. The cost to income ratio (%) shows how the company manage the cost. Since the bank has a high cost including numerous branches, their computer system and many stuff. The company is managing good but the number should be compared with other banks. This should be my homework as well.

ROA should be usually lower for banks since they have enormous assets. The ROE of the company was over 10% last 28 years.

The share price of the company was about $80 per share in the last 5 years but since June 2021, it exceed $100 per share. If you need a 3-3.5% dividend income, the company is good. The company can keep ROE of 10% and can manage well in the past. Also, if you think Australia will grow well in the future, the share price of CBA should also keep up in the long run. Also, the share price would keep up with inflation since their business is all over Australia. I believe the company should be for long term investment.

The company is a funds management company in Sydney which was established by Kerr Neilson in 1994. Their primary product is the Platinum International Fund. They also have funds specialise in Europe, Asia, Japan, healthcare, technology and international brands. In June 2021 Platinum held funds under management (FUM) of $23.5 billion.

I just want to quickly review the three financial statements and FUM last 5 years change. The company’s share price dropped over the year although their funds are doing well. But there are concerns about the outflow and insider trading.

Simplified P/L last 5 years,

	FY17	FY18	FY19	FY20	FY21
Revenue(m)	312.47	328.68	295.22	284.98	269.24
Net income(m)	186.03	191.59	157.61	155.61	163.26
Share of outstanding(m)	585.1	583.2	581.6	580.0	578.7
EPS(cent)	31.8	32.9	26.8	26.8	28.2

Revenues are from fees which are management and performance. But it is mainly from the Management fee based on the last two FYs. There are other incomes however compared to the management fee, they are not much. In the last 2 years, expenses are about 80 million and after-tax they get over 150 million or so. The earning is to me kind of stable for this company. The share price is about A$2.7/share or so at the end of 2021. I believe the company is now cheap.

And, the simplified B/S of PTM is below,

	FY17	FY18	FY19	FY20	FY21
Current Assets (m)	351.4	248.1	222.8	189.9	220.8
Total Assets(m)	354.0	445.8	344.1	355.2	382.3
Current Liabilities (m)	21.9	27.3	17.0	21.9	21.8
Total Liabilities (m)	18.9	34.7	23.1	36.3	40.2
Net Assets = Total equity	335.1	335.2	321.1	319.0	342.0
Net Assets/share	0.57	0.57	0.55	0.55	0.59

Assets are well controlled over 300 million, the company has no debt. It is not likely it goes bankrupt or something in near future. Net Assets and Total equity are the same as far as I see their financial statement, net assets/share is about A$0.55-0.60 per share.

Below is a table for cashflows

	FY17	FY18	FY19	FY20	FY21
CF from operating (m)	165.4	154.6	166.3	150.8	140.5
CF from investing (m)	-22.32	-29.1	-105.7	8.1	40.8
CF from financing (m)	-107.8	-116.6	-112.9	-167.0	-142.4
Dividends paid	-181.6	-181.2	-169.1	-157	-133
Free CF	169.4	159.2	170.8	144.9	144.7
Cash and cash equivalent	154.2	164.3	113.0	105	143.3
Cash/share (cent)	26.4	28.2	19.4	18	24.7

The company has a good amount of cash. The company paid their earnings out almost all to investors. So as long as they manage this company well, it will keep going. So you need to know if you accept it or not. So if you pay A$2.7 a share, you will get about A$0.28 earning/share for every year and $0.55 total assets/share including $0.25 cash/share. So about the P/E ratio is now about 10 or so.

I believe that their source of income their funds, the FUM (Funds under management) of PTM are changing like below

FUM A$b	30 June 2017	30 June 2018	30 June 2019	30 June 2020	30 June 2021
FUM	22.7	25.7	24.8	21.4	23.5
Change (%)	-9.6%	+13.1%	-4%	-14.0%	+10%
Change(B)	+0.0B	+3.0B	-0.9B	-3.4B	2.1B
Change-Performance	+4.7B	+2.0B	-0.7B	-0.4B	+5.5B
Change- Net outflow	-4.7B	+1.0B	-0.2B	-3.0B	-2.3B

The biggest news which is not good at all for investors is Judith Neilson, the former wife of Platinum founder Kerr Neilson has sold a big share of the company on 15th October 2021, her share of the company dropped from 21.48% to 4.93%, she sold 16.55% share of the company at the price of A$3.0/share. So that, you have to evaluate how her move affects the company in the future. So far I believe, the company will do well, at least it will manage to keep constant. So I believe the share price of PTM is now underpriced. However, I am not a financial adviser so if you want to invest in the company, please do your own research. Especially, nowadays, these funds business is very competitive and more index funds are available. The company seems to be trying to get more international investors. So, you should consider them.

This is 2nd edition of company research original research can be found here (https://www.shinichiroyano.com/2021/09/30/asx-whc-analysis-1st-ed2021-09-30/)

Whitehaven Coal is a coal mining and exploration company listed in ASX. The price on Friday, Aug.13th 2021 ended at 2.38 and on Thursday of Sept. 30th, 2021 ended at 3.23 and Nov. 10th ended at 2.48. The share of outstanding is 1.03B so that market capitalization is A$2.55B. The company sells high-quality coal products to the Asian market mainly Japan (55%), Taiwan (16%), Korea (15%) for thermal coal, India (48%), Japan (16%), Vietnam (12%), and Korea (11%) for Metallurgical Coal Sales in FY20. The company’s share price soars because coal is now the highest at least the last 10 years. I am not sure the coal price keeps at this level. The demand for coal surged after the COVID-19 restriction started lifting around the world. In early October, the coal price high an all-time high at 269USD/ton. At the writing in early November, it came back down to about 160 USD/ton. It is still high. Also, there are Chinese demands shrink because the Chinese mining companies are producing coal at a record level since the Chinese government is trying to ease the electricity crisis in China. However, Whitehaven is not selling its coal directly to China.

	FY20-1 (million)	FY20-2 (million)	FY21-1 (million)	FY21-2 (million)
Revenue	885.1	836.5	699.3	857.7
EBITDA	177.3	128.7	37.2	167.3
NPAT	27.4	2.6	-94.5	-449.4
Dividend	1.5	0	0	0

The company was having a hard time last the 4 half-year results because of the coal price. After the coal price came back, the price of the share has been rising. I believe the company will start making money from FY22 in the first half because of the high coal price. I could not see a big picture here so I checked at least 5 years of history as below.

\A$m	FY17	FY18	FY19	FY20	FY21
Revenue	1,773.2	2,257.4	2,487.9	1,721.6	1557.0
EBITDA(underlying)(*)	714.2	1011.9	1041.7	306	204.5
Net profit after tax	405.4	524.5	564.9	30	-543.9
EPS (taken from WSJ)	0.41	0.53	0.53	0.03	-0.55
Operating Cashflow (**)	607.6	883.4	916.5	146.4	138.8
Net debt	311.1	270.4	161.5	787.5	808.5
Dividend (cents)	6	40	50	1.5	0

Surprisingly, on the day of releasing FY21 results, the share price rose 4.95%. I believe the investor understood this NPAT is the worst last 5 years because of the A$650m impairment of their asset. Revenue went down last two financial years it is because the coal price was low. I will show you later but the coal production does not change much last 5 years. In the last 5 years, FY18 and FY19 they had good NPAT but now the coal price is much higher since the beginning of FY22.

(*)I tried to find information from the company’s financial report but I saw some inconsistency. (**)I took data from the company’s financial report and the WSJ website.

\A$m	FY17	FY18	FY19	FY20	FY21	FY22Sept
Unit cost/ton $Am	58	58(62)(***)	67	75	74
Realized thermal coal Prices USD/t	81	98	100	66	68	142
Matellgurical USD/t	102	119	119	89	85	134
ROM coal production Mt	23.1	23.0	23.2	20.7	20.7	5.16
Sales Mt	20.7	22.1	21.6	20.2	19.8	4.64
Thermal coal (Mt)	16.2	16.1	17.5	17.2	17.2
Metallurgical coal (Mt)	4.4	6.0(****)	4.1	3.0	2.6
	0.75	0.78	0.72	0.67	0.74

I have updated the information based on the last quarterly report. Both types of coal prices are up.

I have tried to calculate some here. The coal run-of-mine (ROM) production FY21 was 20.7Mt, Managed coal sales were 19.8Mt. The company sells coal about 20Mt each year. The production and sales look stable for at least 5 years even with COVID-19 and bushfires, and floods. So, the average sales of coal are about 20Mt/year = 55kt/day. The gross profit a day would be 55kt*(212USD/0.719-74)= A$12.1 million a day. They are getting 12.1 m/1.03 b = $0.0117 per share a day. If I assume 55kt*(120USD/0.719-74)= A$5.11 million a day. They are getting 5.13 m/1.03 b = $0.005 per share a day. The net debt is 808.5m at the end of FY21, 67 days just needed to pay them all with the current 212USD/ton level. Now it is a level of 150USD/ton, even with this high rate of coal price, it takes some time for WHC to pay off the debts.

FY20 sales = 17.2Mt*(66/0.67)+3.0Mt*(89/0.67)=1694m+398m=2092m

FY21 sales = 17.2Mt*(68/0.74)+2.6 Mt*(85/0.74)=1580m+298m=1878m

Somehow, I am off for about 371m and 321m from Revenues, why? I need to revise here again.

FY21 profit = 17.2Mt*(68/0.74-74)+2.6Mt*(85/0.74-74)=308m+106m=412m, this is also different from EBITDA or NPAT. Maybe I need to understand the account better. I will update these later.

(***) I see the inconsistency of the cost of coal/ton or unit cost/ton (****) I might have missed but I could not find the number in financial reports from WHC.

The data was taken from tradingeconomics.com. Sorry I didn’t have data itself so rough analysis. I put unit cost/ton level, NPAT, and Revenues. Now, we see WHC will enjoy the highest coal price last the 10 years. As long as I see it I will hold it until when the coal price goes down to 120USD/t level. As long as I can see it in the future today (November 2021), it will be until August 2022. As described in the last paragraph, at that level, the company keeps making money.

In the quarterly report on October 14th, 2021, the company said they will keep paying down their senior debt facility, they expect to repay the debt facility early in CY22 and be in the net cash position in March 2022 quarter. So hopefully, eventually the share price will be going up. The highest price in the last 5 years was A$5.89/share @July 6th, 2018. If the coal price is higher than 120 USD/t and keeps it there, they will break this price, I think…..

As far as I understand, the company is a fibre infrastructure business that has three pillars of business, wholesales & infrastructure, a Communications Platform as a Services, and Consumer & business. The company grew so quickly in revenue, earnings and free cash flow since listing by buying companies over 2019-2020. Now the company says it is under organic growth. Since the listing, now the company 6th largest company in ASX in April 2021, at the time of writing November 2021, it is 4th largest after Spark New Zealand Ltd (SPK). Now it is bigger than Chorus and Vocus (Vocal was removed from the list because of Voyage taking over）.

	FY19H1	FY19H2	FY20H1	FY20H2	FY21H1	FY21H2
Revenue (A$m)	3.1	11.3	22.0	36.2	54.6	105.3
EBITDA (A$m)	—	0.7	7.2	19.3	29.3	64.5

The UWL was listed in February 2019. The company is continuously growing However, the company underlying EPS is still $0.06 on FY20 and $0.09 on FY21. Looking at the revenue of 138.7m and NPAT of 29.2m over shares on issue is 685.22m, the current share price (around $4.08 on 7th November 2021) is quite expensive. It is a growth share and by looking at the share price, investors generally think that the company will be going well. But no one can see the future, so we need to check out the company keeps doing well and delivers until they find a good position in the internet infrastructure business.

One can say the Uniti can be on the right track for several reasons,

1. Property markets are expanding …. Even during the pandemic, the demand for the property is very strong. After lockdown was lifted, the constructions started, the could put the cable in for those properties.
2. Life style is changing …. I am not sure the future but I believe more people want to work from home now, maybe some employee likes to buy home bit far from city and they need a good connectivity to work remotely.
3. Digital economy is coming …. The need for the connectivity at home, the office, and fuctory is only expanding. If they can deliver good, fast, relaible connectivity, they will get more costomers. These new degital economy, such as e-sports, IoT, AI, smart factories all need connectivity.
4. They have recurring bussiness … They are expanding in greenfield, more and more contracted / in contracted premise to provide connectivity. Once they are stable, the company can have recurring bussiness with the customers.

Now the company is the 4th largest listed in ASX, by thinking of Spark is for New Zealanders, the UWL now is the 3rd in Australia. If people think the company could be next Telstra or TPG, the market capitalization can go 4 times to 10 times. Once they can provide excellent connectivity for the premise in Australia after they get a good number of customers in Australia, the company will have a good recurring business. On the other hand, the total secured premise is just over 0.5 million, although the expanding rapidly like 15% in a half year, still, we need to check in these number continuously grow.

	FY21H1	FY21H2	ratio
Total Secured premises (k)	438	501.9	15.0%

This company is one of the growth stocks in ASX, In the last 12 months, the company grew statedly, it became 3.34 times larger in the last 12 months. It has been tough in the last two months. Maybe investors do not like very low EPS, high P/E ratio. I should see this last 2 months’ trend, we can see the company will actually fly or the share price could stack around $4/shares. Let see how the company will grow.

This post is based on the presentation of the annual results of DEXUS on 17th August 2021. The DEXUS has three earning drivers, property portfolio, funds management, and trading. The total fund under management of Dexus is A$42.5b (Dexus portfolio A$17.5b and Funds management portfolio A$25.0b). The total property funds from operation (FFO) is A$780.5m. On the other hand, the company has total debt of A$4.8b (the debt maturity largely distributed in 4 years of FY24-27) The business looks stable even under COVID-19 impacts, the FY21 rent collection reached 98.1%

	FY20	FY21	change
Office property FFO	671.4	658.3	-2.0%
Industrial property FFO	124.2	122.2	-1.6%
Total property FFO	795.6	780.5	-1.9%
Underlying FFO	694.9	666.6	-4.1%
Trading Profits	35.3	50.4	42.8%
Distribution	550.3	561.0	1.9%

FFO means Funds from operations. The compositions of FFO = Office (74%) + Industrial (14%) + Funds/Trading (12%). Trading profits last 7 FY are between $34.7m to $63.3m (that will be shown later in table). They distribute almost 100% of Adjusted Funds from operations, the share of outstanding is about 1.075b, so they distribute about 50 cents or so a year. The graph is shown in the last.

	FY20	FY21	change
Underlying FFO/share?? (cent)	63.5	61.5	-3.1%
Distribution/share (cent)	50.3	51.8	3.0%
Net Tangible Assets/share (A$)	10.86	11.41	5.1%

Underlying FFO, Distribution, and NTA per share are above. Even during COVID-19 and the business has been stable. However, FY22 could be affected because of 4 months of lockdown. Net Tangible Assets is increasing so it looks, for now, NTA/share = share price and they are creating like 4.5% of return from it.

They have a A$17.5b worth portfolio,

Dexus portfolio (A$b)	17.5	100%
Office	14.0	80%
Industrial	3.0	17.1%
Retail	<0.1	<1%
Healthcare	0.5	2.9%

This is a breakdown of the DEXUS portfolio. The Office portfolio is A$14.0b with 95.2% occupancies and 4.6 years WALE. The industry portfolio is A$3.0b with 97.7% occupancy and 4.4 years WALE. The rest are shown but they are still small.

Also, they have a A$25.0 fund under management,

Fund management in total (A$b)	25.0	100%
Office	12.0	48.0%
Industrial	4.8	19.2%
Retail	6.2	24.8%
Healthcare	0.7	2.8%
Real Estate securities	1.3	5.2%

The Fund management in total increased 61% from FY20 (From A$15.5b to A$25.0b), which is impressive however I don’t understand how it happens. Maybe I will look into it here more. Like the portfolio, they are mostly from managing the office, industrial, healthcare. This part only contributes 12% (about $79m) including trading.

track record	FY15	FY16	FY17	FY18	FY19	FY20	FY21
Post-tax profitA$m	42.6	63.3	47.2	36.6	34.7	35.3	50.4

Finally trading, DEXUS deliveries trading profits over time. It is good but trading is not contributing much considering the share of outstanding is about 1b or so. Maybe $0.05 per share.

The DSK went public in November 2020. I believe the Dusk is already widely known as candle business and popular among Australians. They reported FY21 results however this hasn’t affected much from more than 4 months of lockdown in NSW, and following lockdown in other states in Australia. However, I believe the company will be great after the lockdown lift because they have a strong financial position and brand. Also, international expansion will be interesting in the long term beginning with New Zealand. I believe it can expand to other Asian countries such as Japan, China and so on. Especially, Japan can be a good candidate they have a large population and they are having a bath every day at home. Other English speaking countries can be other good candidates for the expansion.

	FY17	FY18	FY19	FY20	FY21
Sales (A$M)	64.8	74.4	86.1	100.8	148.6
Online sales (A$M)	1.5	3.1	4.5	8.8	11.2
Store Network	89	96	106	112	122
Average transaction value (A$)	—	39	41	46	51

The sales keeps growing last 5 years and online sales are also increasing constantly. They are also adding stores even during the pandemic. Also, they already committed to 7 stores in FY22. In addition to this, average transaction values increasing is a great sign. The customers are spending more money on their products. The online sales before FY21 have been not much, I would like to know how much they increased sales during lockdown time in Australia. They upgraded their web platform in August 2021, hope I can see progress on online sales during a hard time. I will do the estimation later on. It should have been great if NSW and VIC state in Australia were in not lockdown.

	FY20	FY21	change
Revenue	100.8	148.6	47.4%
Gross profit	65.6	101.3	54.4%
Cost of doing business (CODB)	50.8	59.9	18.0%
CODB/Sales	50.4%	40.3%	-20%
EBITDA	14.8	41.4	179.2%
NPAT	8.2	26.8	225.5%
EPS (cents)	16.4	35.1	114.0%
dividend (cents)	—	25.0	—
shares of outstanding	57.7m	62.3m	7.97%

They only went public less than a year so here is the result last two years, which I could get from their report. Even at the beginning of the pandemic late FY20 and the whole FY21, they have improved their business very fast. One thing I like is their improvement of the cost of doing business (CODB) of sales. So they are increasing revenue and improving the CODB at the same time. So if they can continue to do this, the company can be more profitable.

For the sustainable future growth of the company, there are 4 key drivers to grow the market share, 1. Dusk Rewards, 2. OMNI-Channel, 3. Store Network, and 4. Dusk Proprietary Products.

Dusk Rewards is a loyalty membership for the company. They pay A$10 for two years membership. Currently, they have 688k members 49% growth from the end of FY20. The members are loyal to the company, the member represents 60% of sales. So we need to keep looking at the number of members. The OMNI-Channel is an online sales channel connected wisely with shopping at the shop. Expansion of store network as showing below. It could be harder now to expand more. In last 4 years, the company has opened about 10 stores a year and close 1 to 3 stores a year.

	NSW	VIC	QLD	WA	SA	ACT	NT	TAS	Total
Physical store	33	26	30	17	7	3	1	4	121

The Dusk is not only selling candles. They are also trying to increase high-margin consumable products, all categories are increasing the sales.

	FY20	FY21	change
Candles	33.8	49.2	45%
Diffusers and Consumables	30.8	47.6	54%
Homewares	12.7	16.6	30%
Mood Reeds	11.7	15.4	32%
Other	11.8	19.9	69%
Total	100.8	148.6	48%

Balance sheets look OK. The company has no debt. The current ratio is about 1.18. Maybe they want to improve here after experiencing the lockdown. On the other hand, I would like to take a look at cash flow statements to see their operating, investing, financial activities.

A$m	FY19	FY20	FY21
Current Assets	40.9	20.1	37.9
Current Liabilities	35.3	31.4	32.0
Current ratio	1.16	0.64	1.18

Finally the estimation of FY22,

	FY20	FY21	FY22 est.
Revenue	100.8	148.6	110
Gross profit	65.6	101.3	75
Cost of doing business (CODB)	50.8	59.9	38.5
CODB/Sales	50.4%	40.3%	35%
EBITDA	14.8	41.4	36.5
NPAT	8.2	26.8	23.6
EPS (cents)	16.4	35.1	37.8
dividend (cents)	—	25.0	—
shares of outstanding	57.7m	62.3m	62.3m

FY22 Revenue estimation = (FY21 total sales – online)*(1-0.35+0.05) + (online sales)*1.27

FY22 Revenue estimation Revenue = (148.6-11.2)*(0.7) + (11.2)*1.27 =96.18+14.22=110.4m

Assumptions: sales = revenue, they lose 35% of store closure and restriction but offset of revenge consumption after lockdown lift and keep using the same number for online sales growth so I add 5% increase. Online sales 27% increase based on FY20-21 number, I would say, this could be higher because of lockdown.

FY22 Gross profit = FY22 Revenue*(FY21Gross Profit/FY Revenue) = 75m

FY22 EBITDA = FY22 Gross Profit (1 – FY22 improved CODB/Sales=0.35) = 36.5m

FY22 NPAT = FY22 EBITDA*(FY21 NPAT/FY21 EBITDA) =23.6m

The CODB improves further by 5%. Cost of sales/sales ratio, NPAT/EBITDA, and share of outstandings are the same. So I could estimate FY22-EPS is the same level as FY21, this is the bottom line, hope they can do better than here if they could follow the growth trajectory like before. If only the COVID-19 gives them a step back, their share price is stable this FY22 but I think they can improve in the long term after FY23 if they can stay on track.

The Northern Star (NST) is an Australian gold producer. The NST owns three gold production sites Kalgoorlie, Yandal, and Pogo. They are targeting to reach 2Mozpa by 2027 with Kalgoorlie (1.1M), Yandal (600k), and Pogo (300k). And currently, they are mining 1.6MOz in group production.

\A$m	FY17	FY18	FY19	FY20	FY21
Revenue	869	964	1401	1972	2761
EBITDA	426	447	489	798	1138
Net income	189	194	155	258	1033
Share of outstanding(*)	613	615	645	695	904
EPS = NPAT/Share of outstanding	0.31	0.32	0.24	0.37	1.14
Dividend (dollar)	0.12	0.095	0.135	0.27	0.19

In the last five years, the company has gradually increased its revenue and profits. Also, the share of outstanding increases as well because of the M&A of the gold mining company Saracen. 2021 might be an exceptional return we might need to watch. However, if it continues, shares now are about 8.91 so the P/E ratio is 7.82 or so, so I believe is the share is undervalued. But the price has not come back, actually, the share price keeps going down for over a year. So there might be a reason for it. I am thinking that NST bought Saracen in 2020 and 36% of their shares came from Saracen. I have felt Saracen shareholders didn’t like the deal because AISC of Saracen was much better. (*) Diluted shares outstanding, the WSJ website says so it is a slightly larger number than basic shares outstanding

\A$m	FY17	FY18	FY19	FY20	FY21
AISC (A$/oz)	1,013	1029	1296	1,496	1483
Gold sold k oz/year	526	570	841	900	1595
Average gold price realized (A$/oz)	1,673	1704	1764	2208	2277
Operating mine cashflow (A$m)	350	353	379	710	1077
Mineral Resource Moz	10.2	15.9	20.8	31.8	56.5

The AISC is the company reported All-in Sustain Cost. The gold price is about 1700-1900USD/oz since July 2020 with roughly AUD/USD = 0.73 so I believe roughly 2328 (1700USD), 2465(1800USD), 2602(1900) AUD/oz. I think the current level of gold price and AUD/USD continues so the NST can make money comfortably at the FY21 year level. However, I hope they can do better on the cost down as they could do a few years ago so they can make more money. Hope I can see that progress a few years after they took over the Saracen. The gold sold is going 1.6 Moz level now jumped at FY21 and they are gaming at the production of 2 Moz by 2027. The mineral resources are increasing over the 5 years, and jumped at FY21 because of the merger with Saracen and also their explorations.

They are aiming at 1550-1650koz of Gold production (usually the same level as gold sold ) with 1,475-1,575AUD/tons of AISC. So if they can run it as they promised and averaged gold price realized, it should be 1.6M*(2277-1525) = 1203.2 million. So the gross profit could be the same as FY21. The EPS should be the same level as FY21 which is 1.14. Even if I want P/E = 10, the NST share price is 11.4, comfortably below the share price of 9.06@October 7th 2021. Also, they are trying to reach 2MOz of gold production by 2027, a 25% increase over 5 years. But this needs to carefully add analysis and depends on the gold price and production continues. However, since governments around the world are printing money so much, I believe the gold price should go up in long term. So you might want to either put gold or NST to protect your financial assets.

\A$m	FY17	FY18	FY19	FY20	FY21
Current Assets	486	558	454	1110	1840
Current Liability	175	200	218	638	771
Current ratio	2.78	2.79	2.08	1.73	2.39
Non-current liability	135	195	310	1029	2499
Total assets	924	1220	1640	3810	11250
Total liability	310	395	529	1670	3270
Total equity	614	821	1110	2140	7980

Did I miss something else? The debt of the company. Operational-wise, the company is doing great for manageable liability. I am a bit concerned about the increase in the last two years. On the other hand, total assets also jumped. I am not worried about the operations at the moment.

Currently, the Northern Star is the second largest gold mining and exploration company in ASX after Newcrest Mining (ASX: NCM). The NCM is roughly double the size of NST now. Maybe next time update, I will compare these two companies. Also, I could take a look at their cashflows.

(I don’t think this is my final analysis of the company, I will keep updating and adding more analysis)

Whitehaven Coal is a coal mining and exploration company listed in ASX. The price on Friday, Aug.13th 2021 ended at 2.38 and on Thursday of Sept. 30th, 2020 ended at 3.23. About 36% up in just one month and a half. The share of outstanding is 1.03B so that market capitalization is A$3.33B. The company sells high-quality coal products to the Asian market mainly Japan (55%), Taiwan (16%), Korea (15%) for thermal coal, India (48%), Japan (16%), Vietnam (12%), and Korea (11%) in FY20. The company’s share price soars because the coal price is now the highest at least the last 10 years. I am not sure the coal price keeps at this level. The demand for coal surged after the COVID-19 restriction started lifting around the world. Also, there are Chinese demands although the Whitehaven is not selling their coal directly to China. I wrote here until when I hold this company of shares.

	FY20-1 (million)	FY20-2 (million)	FY21-1 (million)	FY21-2 (million)
Revenue	885.1	836.5	699.3	857.7
EBITDA	177.3	128.7	37.2	167.3
NPAT	27.4	2.6	-94.5	-449.4
Dividend	1.5	0	0	0

The company was having a hard time last the 4 half-year results because of the coal price. After the coal price came back, the price of the share has been rising. I believe the company will start making money in FY22-1 because of the high coal price. I could not see a big picture here so I checked at least 5 years of history as below.

\A$m	FY17	FY18	FY19	FY20	FY21
Revenue	1,773.2	2,257.4	2,487.9	1,721.6	1557.0
EBITDA(underlying)(*)	714.2	1011.9	1041.7	306	204.5
Net profit after tax	405.4	524.5	564.9	30	-543.9
EPS (taken from WSJ)	0.41	0.53	0.53	0.03	-0.55
Operating Cashflow (**)	607.6	883.4	916.5	146.4	138.8
Net debt	311.1	270.4	161.5	787.5	808.5
Dividend (cents)	6	40	50	1.5	0

Surprisingly, on the day of releasing FY21 results, the share price rose 4.95%. I believe the investor understood this NPAT is the worst last 5 years because of the A$650m impairment of their asset. Revenue went down last two financial years it is because the coal price was low. I will show you later but the coal production does not change much last 5 years. In the last 5 years, FY18 and FY19 they had good NPAT but now the coal price is much higher since the beginning of FY22.

(*)I tried to find information from the company’s financial report but I saw some inconsistency. (**)I took data from the company’s financial report and the WSJ website.

\A$m	FY17	FY18	FY19	FY20	FY21
Unit cost/ton $Am	58	58(62)(***)	67	75	74
Realized thermal coal Prices USD/t	81	98	100	66	68
Matellgurical USD/t	102	119	119	89	85
ROM coal production Mt	23.1	23.0	23.2	20.7	20.7
Sales Mt	20.7	22.1	21.6	20.2	19.8
Thearmal coal (Mt)	16.2	16.1	17.5	17.2	17.2
Metallurgical coal (Mt)	4.4	6.0(****)	4.1	3.0	2.6
	0.75	0.78	0.72	0.67	0.74

I have tried to calculate some here. The coal run-of-mine (ROM) production FY21 was 20.7Mt, Managed coal sales were 19.8Mt. The company sells coal about 20Mt each year. The production and sales look stable for at least 5 years even with COVID-19 and bushfires, and floods. So, the average sales of coal are about 20Mt/year = 55kt/day. The gross profit a day would be 55kt*(212USD/0.719-74)= A$12.1 million a day. They are getting 12.1 m/1.03 b = $0.0117 per share a day. If I assume 55kt*(120USD/0.719-74)= A$5.11 million a day. They are getting 5.13 m/1.03 b = $0.005 per share a day. The net debt is 808.5m at the end of FY21, 67 days just needed to pay them all with the current 212USD/ton level.

FY20 sales = 17.2Mt*(66/0.67)+3.0Mt*(89/0.67)=1694m+398m=2092m

FY21 sales = 17.2Mt*(68/0.74)+2.6 Mt*(85/0.74)=1580m+298m=1878m

Somehow, I am off for about 371m and 321m from Revenues, why? I need to revise here again.

FY21 profit = 17.2Mt*(68/0.74-74)+2.6Mt*(85/0.74-74)=308m+106m=412m, this is also different from EBITDA or NPAT. Maybe I need to understand the account better. I will update these later.

(***) I see the inconsistency of the cost of coal/ton or unit cost/ton (****) I might have missed but I could not find the number in financial reports from WHC.