RY 172.93 -0.271% SHOP 157.86 0.7274% TD 75.22 0.2532% ENB 59.74 0.5216% BN 81.36 0.9429% TRI 234.42 0.5404% CNQ 43.01 1.2% CP 104.55 0.7225% CNR 146.44 0.7568% BMO 139.17 0.2377% BNS 77.04 -0.0649% CSU 4487.8101 0.7917% CM 91.94 -0.6054% MFC 44.04 1.1716% ATD 80.33 -0.5694% NGT 54.77 -0.635% TRP 66.14 0.532% SU 50.335 1.4819% WCN 245.2 -2.104% L 191.84 0.64%
Labrador Iron Ore Royalty Corporation (TSX: LIF) is a Canadian corporation which generates all of its revenue from its equity investment in Iron Ore Company of Canada, (IOC) and its IOC royalty and commission interests.
Investment Rationale:
Five-year dividend distribution (Source: REFINITIV)
Technical Price Chart (as on February 07, 2022). Source: REFINITIV, Analysis by Kalkine Group
Risks associated with the Business:
Volatility in international commodity prices might dampen the company’s revenue and cash flows. Recently, authorities in China have curbed steel production in order to reduce emissions and lower input prices, which resulted in a slide in the international iron ore price, and the continuation of the above trend might dampen the overall performance of the company.
Q3FY21 Financial Highlights:
Q3FY21 Income Statement Highlights (Source: Company Report)
Top-10 Shareholders
Top ten shareholders of the company together hold approximately 17.57% stake, BlackRock Institutional Trust Company, N.A., BlackRock Investment Management (UK) Ltd. are the major shareholders in the company with an outstanding position of 5.73% and 2.44%, respectively.
Source: REFINITIV, Analysis by Kalkine Group
Valuation Methodology (Illustrative): EV to EBITDA
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:
Iron Ore Company of Canada (IOC) have a large, high-quality resource with a long mine life of ~25 years, which is a key positive and indicates stability in performance. We have valued the stock using the EV to EBITDA based relative valuation method and have arrived at a double-digit upside (in percentage terms). For the said purposes, we have considered peers like Nexa Resources SA, Wheaton Precious Metals Corp etc. Considering the aforesaid facts, we recommend a ‘Buy’ rating on the stock of LIF at the closing price of CAD 41.6 on February 07, 2022.
One-Year Technical Price Chart (as on February 07, 2022). Analysis by Kalkine Group
*Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached.
*Recommendation is valid on February 08, 2022, price as well.
Technical Analysis Summary
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
Note 1: The reference data in this report has been partly sourced from REFINITIV.
Note 2: Investment decision should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and subject to the factors discussed above.
Disclaimer
The advice given by Kalkine Canada Advisory Services Inc. and provided on this website is general information only and it does not take into account your investment objectives, financial situation and the particular needs of any particular person. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. The website www.kalkine.ca is published by Kalkine Canada Advisory Services Inc. The link to our Terms & Conditions has been provided please go through them. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations later.