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 ~61.81% of the total shareholding. Mawer Investment Management Ltd. and Claret Asset Management Corporation hold a maximum stake in the company at ~­­­14.71% and ~7.97%, respectively.

1.4 Key Metrics:

The company reported healthy growth in its key financials, where revenue increased by 17.6% in FY 2022, while gross profit increased by 12.3%, which is a significant positive. When compared to the previous four years, the company's adjusted EBITDA at CAD 245.4 million in FY 2022 is significantly higher. Furthermore, the group is experiencing sequentially rising operating margins, which aided the company in generating adequate cash from operations and also minimizing in the net debt, demonstrates its strength and adaptability.

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 FY 2022 Financial Performance:

Section 3: Key Risks and Company Outlook

Section 4: Stock Recommendation Summary:

4.1 Price Performance and Technical Summary:

The stock has witnessed a downside of ~2.09% in 1 month and an upside of ~29.48% over the last 3 months. Moreover, the stock is trading above the average of 52-week high price of CAD 24.53 and 52-week low price of CAD 12.65 providing an opportunity to ride the trend.

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 April 3, 2023. 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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