OTCPK:NNDIF - Post by User
Comment by
ckwongon Nov 22, 2021 11:10am
97 Views
Post# 34152903
RE:RE:TD Report and analysis
RE:RE:TD Report and analysis Noranda Income Fund
(NIF.UN-T) C$1.18 |
Stronger Outlook for 2022 as Guidance Shows Uptick in Production Event
We are updating our estimates following Noranda's Q3/21 results.
Impact: SLIGHTLY POSITIVE |
| Market Data (C$) | | | |
| Current Price | | | C$1.18 |
| 52-Week Range | | | $0.92 - $1.53 |
| Mkt Cap (f.d.) ($mm) | | | $59.0 |
| Mkt Cap (basic) ($mm) | | | $0.0 |
| EV ($mm) | | | $223.0 |
| Current Distribution per Unit | | | $0.00 |
| Current Distribution Yield | | | 0.0% |
| Avg. Daily Trading Vol. | | | 149,386 |
| Financial Data (C$) | | | |
| Fiscal Y-E | | | December |
| Units O/S (f.d.) (mm) | | | | 50.0 |
| Float Units (mm) | | | | 37.5 |
| Net Debt ($mm) | | | | $164.0 |
| Net Debt/Total Cap | | | | 49.0% |
| Estimates (US$) | | | | |
| Year | 2019A | 2020A | 2021E | 2022E |
| EBITDA ($mm) | 23.3 | 50.2 | 22.3 | 51.3 |
| EBITDA ($mm) (old) | – | – | 20.6 | 45.8 |
| DPU | 0.00 | 0.00 | 0.00 | 0.00 |
| Payout Ratio (%) | 0% | 0% | 0% | 0% |
| EBITDA ($mm) Quarterly Estimates (US$) | |
| Year | 2019A | 2020A | 2021E | 2022E |
| Q1 | (0.8) | 17.2 | 9.5 | – |
| Q2 | (7.5) | 9.7 | (0.2) | – |
| Q3 | 20.4 | 14.3 | 5.7 | – |
| Q4 | 11.2 | 9.0 | 7.3 | – |
| Valuations | | | | |
| Year | 2019A | 2020A | 2021E | 2022E |
| EV/EBITDA | 7.7x | 3.6x | 8.0x | 3.5x |
| Distribution Yield | 0.0% | 0.0% | 0.0% | 0.0% |
We have updated our model and estimates for the Q3/21 results, as well as the 2022 production guidance, which was slightly above our estimates. This, combined with an increase in our zinc and copper price forecasts, leads to an increase in our 2022 EBITDA forecast.
Despite the recent surge in the zinc price, we have not yet seen a corresponding increase in spot TCs. However, we expect the recent production curtailments at European smelters (both Nyrstar and Glencore) due to high energy costs and power availability issues in China to ultimately lead to rising spot TCs, which would benefit NIF.
Q3/21 zinc production of 64k tonnes was effectively in line with our estimate of 66.5k tonnes. Sales were 63.7k tonnes (TD: 66.5k tonnes).
Adjusted EBITDA for Q3/21 was $5.7mm (TD: $4.8mm; and Q2/21 actual of $0.2mm). The realized zinc premium was $0.06/lb (TD: $0.065/lb).
2021 production and sales targets have been maintained at 260k-270k tonnes, in line with our forecast of 264.5k tonnes.
2022 Production Guidance shows slight uptick: The Fund released its 2022 production and sales guidance, which is expected to be 270k-280k tonnes, which reflects the planned gradual production ramp-up following the commissioning of the strategic expansion projects. The projects are expected to be completed in Q1/22, and the cost of the expansion projects is estimated at $32mm.
Spot TCs remain flat; however, we expect smelter cutbacks to lead to improvements: Spot TCs have remained largely flat at $80/t in October compared with $80/t in September and $82/t in August.
TD Investment Conclusion |
We are maintaining our BUY recommendation and our target price of C$1.50. Our valuation continues to be based on a 3.5x EV/EBITDA multiple on our 2022