Source: Streetwise Reports 09/03/2020
An investment thesis for Vox Royalty is presented in a Red Cloud Securities report.
In a Sept. 2 research note, analyst Derek Macpherson reported that Red Cloud Securities initiated coverage on with a Buy rating and a CA$4.75 per share target price. The company is currently trading at around CA$3.06 per share. (VOX:TSX.V)
“Vox is set to outperform other new entrants to the royalty space as it grows organically via previously acquired assets and inorganically through its innovative and lower cost approach,” the analyst commented.
By employing a unique approach to identifying and selecting target acquisitions, the Canadian company is “disrupting the royalty space,” Macpherson indicated. Vox’s use of digital claim maps and its proprietary database of more than 7,000 existing royalties, which are tied to established mining claims and resources, affords it the advantage of often being the only bidder for a single royalty, the analyst commented.
It also “has allowed Vox to acquire new royalties from nontraditional vendors at a significant discount to peers,” wrote Macpherson, at “an average acquisition multiple of 0.28x net asset value (NAV) versus peer typical royalty acquisitions at 0.66x NAV.”
Today, the Toronto-based company has 47 royalties in its portfolio, five of which it purchased after its May 2020 initial public offering.
“As Vox executes on its strategy and continues to demonstrate its ability to acquire royalties at a discount to peers, we believe it should eventually garner a premium multiple to junior royalty peers,” Macpherson commented.
The analyst pointed out that early-stage royalty companies like Vox tend to outperform their larger peers, due to the cash flow growth and improved share price that generally come from every purchase. On top of that, Vox has the added benefit of growth born out of its exclusive acquisitions database. As such, Red Cloud expects that Vox will continue to add royalties at a faster pace than its peers and at much better values.
Also for Vox, growth is already built into the royalties it owns but it is not fully baked into its valuation, Macpherson noted. The company currently has three producing royalties. Two more are coming online in 2021, resulting in roughly 56% year-over-year growth, according to Red Cloud’s projections. With nine royalties expected to be producing in 2025, revenue growth for Vox between 2021 and 2025 is an estimated 673%.
Macpherson noted upcoming potential catalysts for the royalty and streaming company include initial guidance expected in Q3/20, Q3/20 financial results anticipated in Q4/2020 and additional royalty acquisitions.
1) Doresa Banning compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: Vox Royalty. Click here for important disclosures about sponsor fees.
3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the decision to publish an article until three business days after the publication of the article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Vox Royalty, a company mentioned in this article.
Disclosures from Red Cloud Securities,, Initiating Coverage, September 20, 2020
Red Cloud Securities Inc. is registered as an Investment Dealer in Ontario, Quebec, Alberta and British Columbia and is a member of the Investment Industry Organization of Canada (IIROC). Part of Red Cloud Securities Inc.’s business is to connect mining companies with suitable investors. Red Cloud Securities Inc., its affiliates and their respective officers, directors, representatives, researchers and members of their families may hold positions in the companies mentioned in this document and may buy and/or sell their securities. Additionally, Red Cloud Securities Inc. may have provided in the past, and may provide in the future, certain advisory or corporate finance services and receive financial and other incentives from issuers as consideration for the provision of such services.
Company Specific Disclosure Details
3. In the last 12 months preceding the date of issuance of the research report or recommendation, Red Cloud Securities Inc. has performed investment banking services and has been retained under a service or advisory agreement by the issuer.
Any Red Cloud Securities Inc. research analyst named on this report hereby certifies that the recommendations and/or opinions expressed herein accurately reflect such research analyst’s personal views about the companies and securities that are the subject of this report. In addition, no part of any research analyst’s compensation is, or will be, directly or indirectly, related to the specific recommendations or views expressed by such research analyst in this report.
( Companies Mentioned: VOX:TSX.V,
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