Section1: Company Overview and Fundamental Insights:

1.1 Company Overview:

North American Construction Group Ltd. (TSX: NOA) is a Canada-based company that provides a range of mining and heavy construction services to customers in the resource development and industrial construction sectors in Canada, the United States and Australia. The Company's operating divisions include Heavy Construction and Mining, and Equipment Maintenance Services. 

1.2 The Key Positives, Negatives, Investment Highlights and Risks

1.3 Top 10 Shareholders:

The top 10 shareholders together form ~62.07% of the total shareholding. Mawer Investment Management Ltd. and Cannell Capital, LLC [Activist] hold a maximum stake in the company at ~­­­15.75% and ~10.06%, respectively.

1.4 Key Metrics:

The company reported healthy growth in its key financials, with revenue increasing by 15.3% in Q3 2022, while operating income and net income increased by 23% and 45%, respectively, which is a significant positive. When compared to the previous four quarters, the company's adjusted EBITDA of CAD 60.1 million in Q3 2022 is a significant improvement. Furthermore, the group is experiencing sequentially rising operating margins, which aids the company in generating adequate cash from operations and demonstrates its strength and adaptability. However, in Q3 2022, cash from operations witnessed slight decline.

Section 2: Business Updates and Financial Highlights

2.1 Recent Updates: The below picture gives an overview of its recent activities, such as announcement regarding total return swap agreement and dividend distribution.

2.2 Insights of Q3 FY 2022 Financial Performance:

Section 3: Key Risks and Company Outlook

Section 4: Stock Recommendation Summary:

4.1 Price Performance and Technical Summary:

4.2 Fundamental Valuation

Valuation Methodology: EV to Sales Multiple Based Relative Valuation (Illustrative)

Markets are trading in a highly volatile zone currently due to certain macroeconomic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is November 3, 2022. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock. 

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock. 

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

Disclaimer 

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