St Barbara Limited

Section 1: Company Overview and Fundamentals

1.1 Company Overview:

St Barbara Limited (ASX: SBM) St Barbara Limited is an Australia-based gold mining company. The Company's assets include the Atlantic Operations, Leonora Operations, and the Simberi Operations.     

1.2 The Key Positives, Negatives, Investment Highlights, and Risks

1.3 Top 10 Shareholders: The top 10 shareholders together form ~41.02% of the total shareholding. L1 Capital Pty Ltd. and IPConcept (Luxemburg) S.A. hold a maximum stake in the company at ~10.83% and ~8.32%, respectively.

1.4 Key Metrics: SBM reported a high current ratio of 2.19x in FY22 compared to the industry median of 1.88x. Further, the company took lower leverage in FY22 as it reported a debt-to-equity ratio of 0.15x compared to the industry median of 0.18x. Below is captured the trend of the asset turnover ratio and asset-to-equity ratio:

Section 2: Business Updates, Financial and Operational Highlights

2.1 Recent Updates:

2.2 Insights of 2QFY23: During 2QFY23, the cash balance declined to AUD 38mn compared to AUD 65mn in 1QFY23, owing to lower production and working capital movements. However, the group has improved its safety performance in 2QFY23 with just one injury reported in the quarter, whereas eleven in the prior quarter.

2.3 Strategic Plan Update: The merger and demerger transaction is expected to be implemented by May 2023 as it depends on various approvals, such as SBM requiring approval from its shareholders for the demerger and the issue of SBM securities under the scheme. In contrast, Genesis requires its shareholders' approval for AUD 275mn capital raising for the scheme. Additionally, the scheme also requires the approval of the court.

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 neither an indicator nor a guarantee of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is January 31, 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.

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