Star Royalties Ltd. operates as a precious metals royalty and streaming investment company. It focuses on providing wealth creation through accretive transaction structuring and asset life extension with alignment to both counterparties and shareholders. The company also focuses on investing in a pipeline of additional green investments; and offers financing solutions. Star Royalties Ltd. was incorporated in 2018 and is based in Toronto, Canada.

Canada

Star Royalties Ltd.

Basic Materials

The company does not pay dividends at all, or it pays them sporadically. There have only been a few years with dividend payments in the past ten years. 

STRR.V reported revenue of USD 1mn in the last 12 months, down 14% from FY23. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. 

The stock's performance has been mixed in the past six months, with growth following a decline. There is no clear price trend compared to its global peers from the same sector and industry (as shown above). It has underperformed this peer group by 54ppts over six months and grown 16ppts faster in the past month. This is largely true for peers from the same country and sector. With respect to the stock's valuation against its peers, its overall price performance is neutral.

The company has reported very poor EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to -276.9% in the last 12 months, a decline from -202.1% in FY23. 

Historically, STRR.V has reported very poor net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled -2970.0%, down from 599.4% in FY23. 

Star Royalties Ltd. reported a return on equity (RoE) of -59.8% in the last 12 months, down from 11.3% in FY23. 

Another important profitability metric, return on assets (RoA), amounted to -59.0% in the last 12 months, a decrease from 11.1% in FY23. 

In the last 12 months, the return on capital employed (RoCE) declined to -59.8%, below the peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been -2.0 in the past several years. This ratio implies a fragile 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.

STRR.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 is relatively stable and becomes extremely unfavourable on the days with the lowest activity. However, under highly turbulent market conditions, the trading volume tends to improve significantly. 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 resilient historical revenue growth, low margin volatility, and an favourable capital structure, among the positive credit factors. Among the negative credit factors and we point to bleak profitability, negligible return on capital.

In highly turbulent market conditions, STRR.V is moderately volatile. In other words, the stock will fall 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 moderate. 

In normal market circumstances, STRR.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 large to substantial. 

Considering past and projected metrics, the stock is neither 'expensive' nor 'cheap' compared to its peers. 

Star Royalties Ltd.

CA$ 0.23

3

Star Royalties Ltd.

CA$ 0.23

3

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Profitability factor

Risk / Profitability

Risk factor

Profitability factor

CA$ 0.23

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