Sandfire Resources Limited

Section 1: Company Overview and Fundamentals

1.1 Company Overview:

Sandfire Resources Limited (ASX: SFR) is engaged in the production and sale of copper concentrate containing gold and silver by-products from its 100% owned DeGrussa Operations in Western Australia.

1.2 The Key Positives, Negatives, Investment Highlights and Risks

1.3 Top 10 Shareholders: The top 10 shareholders together form ~43.28% of the total shareholding. AustralianSuper and L1 Capital Pty Ltd. hold a maximum stake in the company at ~13.70% and ~6.58%, respectively.

1.4 Key Metrics:

During 1HFY22, the company recorded a net margin of 17.4% against 4.9% of the industry median. In addition, it recorded a return on equity of 5% as compared to 4.1% of the industry median. Below is the captured trend of the current ratio and the asset-to-equity ratio:

Section 2: Business Updates, Financial Highlights, Quarterly Highlights and Production Summary

2.1 Business Updates:

2.2 Insights of FY22:

2.3 Quarterly Summary:

2.4 Production Summary:

The company experienced notable growth in 4QFY22 in copper and gold production. In addition, copper accounted for 82% of the total value of metal sold in FY22. Below image depicts the trend of copper and gold production: 

Section 3: Key Risks and Outlook:

Section 4: Stock Recommendation Summary:

4.1 Price Performance and Technical Summary:

4.2 Fundamental Valuation

Valuation Methodology: P/E Multiple Based Relative Valuation (Illustrative)

Markets are trading in a highly volatile zone currently due to certain macro-economic 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 August 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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