Newport Exploration Ltd., a natural resource company, engages in the acquisition and exploration of resource properties. The company holds a 100% interest in the Chu Chua copper-gold project located to the north of Kamloops, British Columbia, Canada. It also holds a 2.5% gross overriding royalty interest on oil and gas permits in the Cooper Basin in Queensland, Australia. The company was incorporated in 1979 and is headquartered in West Vancouver, Canada.

Canada

Newport Exploration Ltd.

Basic Materials

The company has a track record of regular dividend payments. It has paid dividends in each of the past ten years. Dividend per share (DPS) has grown yearly, but the dynamics are unclear. In the past 12 months, the dividend yield has been strong and significantly above its peers. At the same time, the average five-year yield has been significantly higher and exceeded nearly all its peers. On average, the company pays dividends quarterly. 

NWX.V reported revenue of CAD 0mn in the last 12 months, down 0% from FY23. The dynamics of cash flow, as measure by free cash flow (FCF), were rather similar. EPS fell 73% from FY23 to CAD 0.01.

Over the last six months, the stock performance has varied, with an increase following a drop. When compared to its international counterparts in the same sector and industry (as shown above), the stock has exceeded their performances, leading by 36ppts in total. There is a distinction between the stock's performance and that of its peers from the same country and industry. Over six months it exceeded the performance of this peer group by 24ppts and accelerated its growth by 12ppts in the recent month. Given the stock's valuation versus its peers, its total price movement is mildly favourable.

In the last 12 months, the return on capital employed (RoCE) declined to 28.5%, above the peers. 

Newport Exploration Ltd. reported a return on equity (RoE) of 28.5% in the last 12 months, down from 28.9% in FY24. 

Another important profitability metric, return on assets (RoA), amounted to 27.7% in the last 12 months, a decrease from 28.0% in FY24. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 8.4 in the past several years. This ratio implies a excellent shareholder value creation. 

The institutional, legal, and compliance risks associated with the company's country are minimal. In combination with stringent business standards, shareholder rights are very highly protected.

NWX.V has very poor trading liquidity. It will take considerable time for the average private investor to sell a common position under normal market conditions. Liquidity may be unstable and becomes extremely unfavourable on the days with the lowest activity. The trading volume mostly stays the same even under highly turbulent market conditions. Another factor to consider is the substantial number of days with zero trading volumes, i.e., without any ability to sell a position. The stock has a tiny market capitalisation, which usually makes its trading liquidity erratic and unpredictable. 

No other major risks have been identified.

The risk of default is minimal. We note solid return on capital, strong debt servicing capacity, adequate interest coverage, solid cash flow generation, and an favourable capital structure, among the positive credit factors. Among the negative credit factors, we point to weak positions in its industry.

In highly turbulent market conditions, NWX.V is highly volatile. In other words, the stock will fall substantially more than the index in times of extreme market volatility or shocking company news. Standalone, the worst-day losses (less than 1% of the time) will likely be significant. 

In normal market circumstances, NWX.V is highly volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will change somewhat erratically. The stock's losses on its worst days (less than 1-5% of the time) will range from significant to immense. 

Based on key historical and expected multiples, the stock is fairly valued relative to its peers. Specifically, the stock is fairly valued on P/E, neutral on EV/EBITDA, underpriced on P/FCF. 

Newport Exploration Ltd.

CA$ 0.12

4

Newport Exploration Ltd.

CA$ 0.12

4

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

CA$ 0.12

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