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There are a few little known small cap ASX shares that could be worth looking into and may be able to generate long-term returns.

Smaller shares have the potential to generate larger returns because they’re starting from a smaller base. Those large cap ASX blue chips have already done a lot of their growing.

These two small cap ASX shares may be worth considering:

Healthia Ltd (ASX: HLA)

This business is a rapidly growing healthcare company that is now operating with three different divisions.

It has a market share of around 1.5% in Australia, with a market share of more than 2.5% in ‘feet and ankles’, more than 1.5% in ‘bodies and minds’ and more than 1.5% in ‘eyes and ears’. Healthia believes each segment has a total addressable market of a few billion dollars.

The company is successfully employing an acquisition strategy to growing its networks of businesses.

During the first half of FY21 alone, the small cap ASX share acquired 55 allied businesses, including The Optical Company (41 optical stores and eyewear frame distributors), seven feet and ankle businesses and six bodies and minds businesses.

The business is rapidly growing both its revenue and profitability. In the HY21 result, revenue increased by 38.9% to $61.5 million, the underlying earnings before interest, tax, depreciation and amortisation (EBITDA) margin improved by 486 basis points, underlying EBITDA surged 90.7% to $11 million, the underlying net profit after tax (NPATA) margin improved 194 basis points to 7.72% and underlying earnings per share (EPS) grew 78.2% to 6.86 cents.

Healthia also declared a dividend of 2 cents per share, showing the confidence of the board.

The business is going to try to acquire a minimum of $20 million of new businesses each year through a combination of bank debt, free cash flow and clinic class shares.

Volpara Health Technologies Ltd (ASX: VHT)

Volpara is a small cap ASX share that specialises in breast screening technology and administration. It utilises AI to improve the early detection of breast cancer by analysing images and associated patient data to provide

The company is making progress on several fronts. It now has a market share of around 30% of US screenings, meaning that around 12.5 million US screenings are using at least one of its products. There is the potential for Volpara to cross-sell and up-sell more of its offerings to its US clients over time.

Volpara is seeing low levels of churn with its annual recurring revenue (ARR) and an increasing average revenue per user (ARPU) – now around US1.40.

The gross margins are particularly strong – one of the highest on the ASX – at more than 86% and rising.

CRA Health is an important acquisition for the small cap ASX share because it increases the ARPU, it’s integrated with large electronic health record systems and it can analyse the images and data even better. Indeed, Volpara just won its biggest contract thanks to CRA Health.

There is the potential for growth into other countries and regions, such as Europe, which would significantly increase the total addressable market. Volpara has signed up key luminaries across both Europe and Asia.

More reading

• Top brokers name 3 ASX shares to buy today
• Why AGL, Clover, QBE, & Volpara shares are pushing higher today
• 2 small cap ASX shares with huge potential
• Why Corporate Travel Management, Silver Lake, Volpara, & Vulcan are pushing higher
• Here’s why the Volpara (ASX:VHT) share price is storming higher

Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends VOLPARA FPO NZ. The Motley Fool Australia has recommended HEALTHIA FPO and VOLPARA FPO NZ. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Centuria Industrial REIT (ASX: CIP) share price is edging higher in morning trade, up 2.22% to $3.23.

The real estate investment trust (REIT) is Australia’s largest domestic pure-play industrial REIT. Below we take a look at the S&P/ASX 200 Index (ASX: XJO) listed company’s latest announcement on its portfolio valuation.

What did the REIT report?

The Centuria Industrial REIT share price is gaining after the company reported the value of its portfolio of industrial assets increased by 8.1% or $192 million on a like-for-like basis from prior book values.

Centuria completed external valuations on 56 of its 61 industrial properties, which the company reports represents around 93% of its total portfolio by value, as at 31 March.

The new valuation brings Centuria Industrial’s total portfolio value to $2.6 billion.

The company pointed to its leasing success and capitalisation rate compression in Australia’s industrial market as key factors driving the increased valuation.

The REIT’s Telstra Corporation Ltd (ASX: TLS) data centre in Clayton, Victoria led the charge higher, with its value increasing by $28.3 million.

Commenting on the revaluation, Centuria Industrial fund manager Jesse Curtis said:

Australia’s industrial property market is currently experiencing a substantial re-rate, attracting significant investment demand from both domestic and international capital. Major transactions in the market continue to show capitalisation rate compression, complemented by strong tenant demand from e-commerce and a scarcity of investment grade assets.

Curtis added, “The CIP portfolio remains in an extremely strong position holding occupancy of 97.7%, WALE [weighted average lease expiry] of 9.8 years and portfolio capitalisation rate of 4.96%.”

So far in the 2021 financial year, Centuria Industrial has transacted $757 million worth of industrial assets. The REIT reported that these new assets contributed to $64 million of its total portfolio revaluation gain.

Centuria Industrial pays a 5.6% annual dividend yield, unfranked.

Centuria Industrial REIT share price snapshot

Over the past 12 months, Centuria Industrial REIT shares have gained nearly 17%. That trails the 33% gains posted by the ASX 200.

Year to date, the Centuria Industrial REIT share price is up 4.5%, outpacing the 2.2% gains from the ASX 200.

More reading

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• Why is the Woolworths (ASX:WOW) share price up 5% in a week?

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Maca Ltd (ASX: MLD) share price is edging higher this morning after the company announced a contract win. At the time of writing, the mining and civil construction company’s shares are trading at $1.06, up 1.92%.

Let’s take a closer look and see what Maca updated the ASX with.

What’s pushing the Maca share price higher?

Investors are pushing the Maca share price higher after digesting the company’s latest update.

In its announcement, Maca advised that it has secured a ‘Hire and Maintenance’ contract for CITIC Pacific Mining Management (CPM). This will see Maca provide a number of services at CPM’s Cape Preston Sino Iron magnetite project. Situated 100km south-west of Karratha in the Pilbara region, the project is the largest magnetite mining and processing operation in Australia.

Depending on the number of works completed, the contract is expected to generate $200 million in revenue for Maca. Services are scheduled to commence in April 2021 and will run over a 36-month term.

Maca highlighted that its work-in-hand position stands at $3.4 billion as of February this year.

What did the CEO say?

Maca CEO Mike Sutton welcomed the deal, saying:

Maca is very pleased to continue working with CITIC Pacific Mining at the Sino Iron magnetite project, and we value the long-standing relationships we have with our clients at this pioneering megaproject.

The current CPM contract was novated from Downer to Maca, following the acquisition of the Mining West business, and it’s pleasing to have now secured this three-year extension.

About the Maca share price

The Maca share price has surged by around 80% in the past 12 months. Year to date, however, Maca shares are down around 12%.

Based on the current share price, Maca has a market capitalisation of around $355.3 million, with 341.7 million shares outstanding.

More reading

• Why the Red 5 (ASX:RED) share price is lifting 6% today

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Many ASX-listed buy now, pay later shares eye the US market as a key growth opportunity given its $5 trillion total addressable retail market. Afterpay Ltd (ASX: APT), Zip Co Ltd (ASX: Z1P) and Sezzle Inc (ASX: SZL) are the ASX players taking charge for customer acquisition and market share. 

Affirm Holdings Inc (NASDAQ: AFRM) might have slipped under the radar for many investors given the fact that its listed on the Nasdaq Composite (INDEXNASDAQ: .IXIC). How does the Afterpay share price size up against its biggest US rival?

Affirm share price snapshot 

Affirm is the largest US-listed BNPL provider. The company listed on the Nasdaq on 13 January 2021 at an initial public offering (IPO) price of US$39 and an indicative market capitalisation of approximately US$10 billion.

Its shares ran as high as US$146.90 by mid-Feb or a 275% return for investors that managed to participate in the IPO. The recent tech-led selloff has seen the Affirm share price more than halve since its $146.90 high to close at $69.56 on Thursday. 

Affirm vs. Afterpay share price comparison 

Below are some of the key metrics that could be used to gauge the size of a BNPL player. 

	Affirm	Afterpay
Gross Merchandise Value (USD m)	6,010	12,014
Active customers (m)	4.5	13.1
Active merchants (000s)	7.9	74.8
Market cap USD (m)	20,482	25,119
Funding capacity (USD m)	4,700	1,044

Source: Macquarie Research, March 2021 

Despite the significant market capitalisation of Affirm, the company only has regional exposure to North America. 

In comparison, Afterpay has operations in Australia, New Zealand, the UK (Clearpay), the US, Canada and Europe (Pagantis). Afterpay has also created a base in Singapore and is exploring opportunities to target the South East Asia market. 

Why does the Afterpay share price look cheap? 

The Afterpay share price is significantly ahead of Affirm across all key KPIs except funding capacity. This might make the Afterpay share price look cheap at face value.

US shares have the tendency to be more richly valued with a much deeper pool of investors and liquidity. This could be why capital intensive ASX-listed shares such as Piedmont Lithium Ltd (ASX: PLL) and Mesoblast Ltd (ASX: MSB) are also listed on the Nasdaq. 

This may also explain why the Zip share price surged in February on the back of speculation that the company could be looking at a secondary listing in the US. This would allow US fund managers easier access to Zip shares and greater accessibility to the capital markets when necessary.

More reading

• Afterpay (ASX:APT) share price hits 3-month low: Time to buy?
• Why is the Woolworths (ASX:WOW) share price up 5% in a week?
• Down 20% with no news, what’s with the Cirralto (ASX:CRO) share price?
• Is the Affirm share price dragging ASX BNPL shares lower?
• 5 things to watch on the ASX 200 on Thursday

Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Sezzle Inc. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Sezzle Inc. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The News Corporation (ASX: NWS) share price is charging higher in morning trade, up 3.24%.

This comes after the S&P/ASX 200 Index (ASX: XJO) listed global media company announced a major acquisition.

About the acquisition

The News Corp share price is moving higher in morning trade after the company reported it will acquire Investor’s Business Daily (IBD) from O’Neil Capital Management for US$275 million (AU$361 million).

News Corp subsidiary Dow Jones will run the newly acquired business, which operates the Investors.com website.

According to the release, IBD generates more than 90% of its revenue from its digital offerings. And revenue has been growing at double-digit levels for the past several years. IBD currently has almost 100,000 digital subscribers, with News Corp reporting a “minimal overlap” with Dow Jones’s subscriber list.

Commenting on the acquisition, News Corp CEO Robert Thomson said:

IBD will greatly enhance our e-expertise in finance, with compelling digital coverage, unique tools and high-yielding services. We will be able to cross-sell and up-sell with Dow Jones financial products and provide specialist insights for a knowing business audience… This transformative deal obviously comes as investor interest is surging in stock and bond markets and there is a premium for intelligence, insight and integrity.

Almar Latour, CEO, Dow Jones added, “The prospect of combining our collective skills and strengths, especially our shared legacies of trusted, rigorous journalism and research, opens up a wide range of potential.”

Completion of the deal is subject to the standard legal conditions and approvals. News Corp anticipates closing the deal in the fiscal quarter ending 30 June.

News Corp share price snapshot

News Corp shareholders have enjoyed a profitable 12 months, with shares of the media company up 125%. By comparison, the ASX 200 is up by around 34% over that same time.

Year to date, the News Corp share price is up 40%.

News Corp pays an annual dividend yield of 0.7%, unfranked.

More reading

• ASX 200 down 0.3%: Afterpay & Zip lower, AGL signs Portland Smelter deal
• Nine (ASX:NEC) and News Corp (ASX:NWS) share prices rise after Facebook deal
• Could this have moved the News Corp (ASX:NWS) share price today?
• 2 not-so-obvious ASX shares to cash in on the property boom

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Santos Ltd (ASX: STO) share price is on the rise in early trade after a production update from the Aussie oil and gas giant this morning. At the time of writing, the Santos share price has edged 0.99% higher to $7.15.

Let’s take a look at what the company announced.

What’s driving the Santos share price?

Santos provided an update on production at its Ningaloo Vision floating production storage and offloading vessel (Ningaloo Vision). This comes after scheduled vessel maintenance in Singapore.

Ningaloo Vision, which ties together several oil fields off the Western Australian coast, has now ramped-up production again. The offshore vessel is expected to achieve production of 10,000 barrels per day in the coming weeks.

Santos managing director and CEO Kevin Gallagher said the vessel’s return to production sets the company up for the next stage of production from the Van Gogh oil field. Santos has a 52.5% interest in the Van Gogh-Coniston-Navara project with the remaining 47.5% held by Inpex.

How has Santos performed recently?

The Santos share price has surged higher in the last 12 months after a large share price collapse in March 2020.

Oil prices plummeted last year as the coronavirus pandemic took hold. Demand for energy collapsed as widespread border closures and localised lockdowns reduced usage in key industries like travel and manufacturing.

That saw the Santos share price plummet lower, which somewhat skews the story of the company’s recent performance.

Foolish takeaway

The Santos share price is responding positively after today’s update from Ningaloo Vision, with the vessel expected to add 10,000 barrels per day.

According to Bloomberg, however, overnight the WTI and Brent crude oil prices fell 4.4% and 4% lower, respectively. WTI closed at US$58.49 per barrel while the Brent crude oil price fell to US$61.82 per barrel. This could be subduing the impact on the company’s share price of its positive update today.

More reading

• Why is the ASX 200 (ASX:XJO) so reliant on the US stock market?
• 5 things to watch on the ASX 200 on Friday
• ASX 200 rises, Brickworks builds, Netwealth sinks
• Why is the Woolworths (ASX:WOW) share price up 5% in a week?
• 2 ASX 200 shares that keep growing their dividends

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The TPG Telecom Ltd (ASX: TPG) share price has slumped in early trade today after the company released its 2020 annual report. It comes after the full-year financial report release to shareholders in February 2021.

Today’s report highlighted the surge in full-year revenue and profits for the Aussie telco. That came after a $15 billion merger with Vodafone Hutchison Australia Pty Limited (Vodafone) in July 2020.

TPG also provided an update on its strategic initiatives and broader group focus in the annual report.

At the time of writing, the TPG share price is down 9.3%, trading at $6.26.

Why is the TPG share price falling?

TPG this morning provided its annual report for the year ended 31 December 2020 (FY2020). Revenue and earnings before interest, tax, depreciation and amortisation (EBITDA) surged higher, making the TPG share price worth watching today.

Full-year revenues jumped 24 per cent from 2019 to $4.35 billion while EBITDA climbed 18 per cent to $1.39 billion. That saw net profit after tax (NPAT) rocket higher to $734 million after a $280 million loss in 2019. However, TPG did note that the 2020 and 2019 results are largely incomparable due to the impact of the merger.

On the balance sheet side, TPG’s net assets reversed from -$1.2 billion in 2019 to $11.9 billion in 2020. That comes after the July 2020 merger, which created the current large-cap Aussie telco group.

The TPG share price is one to watch following this morning’s update. Shares in the Aussie telco have trended lower since mid-2020, dragging TPG’s market capitalisation to its current $12.9 level.

The group’s strategic priorities remain on rolling out its 5G network to reach scale in major cities. That includes a 2021 target to reach 85 per cent 5G population coverage in the top six cities.

TPG will also focus on enhancing and simplifying the customer experience while delivering more benefits of the merger to stakeholders. The telco is also forecasting $70 million in cost savings as part of the synergies from the merger.

Chairman resignation

The TPG share price is slumping this morning following the annual report release. That coincided with another announcement that TPG founder David Teoh will resign as chairman.

Mr Teoh has been with TPG for over 30 years but has today announced his resignation alongside his son, Shane Teoh. Canning Fok will become chairman of the board while Mr Teoh’s other son, Jack, will join alongside Antony Moffatt.

More reading

• TPG Telecom (ASX:TPG) share price slumps 6% as founder resigns
• ASX 200 rises, Brickworks builds, Netwealth sinks
• Which ASX 200 shares haven’t recovered from the COVID-19 crash?
• Leading brokers just upgraded these ASX shares to “buy” today
• 3 reasons why Brickworks is a great ASX dividend share

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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TPG Telecom Ltd (ASX: TPG) shares are falling this morning following news that company chair and founder David Teoh has resigned, effective immediately. In the opening minutes of trade, the TPG share price is trading 6.11% lower at $6.45. In contrast, the S&P/ASX 200 Index (ASX: XJO) has opened slightly higher.

In a statement to the ASX, Mr Teoh confirmed he would be leaving the company after more than 30 years. 

Let’s take a closer look at the company’s announcement.

David Teoh leaves, major board reshuffles

The TPG share price is on the slide today following this morning’s news. In a letter to shareholders, Mr Teoh outlined his reasons for leaving. The billionaire said the company was growing faster than expected and “now would be the right time…to step aside and pursue other interests.”

“When [wife] Vicky and I started our business more than 30 years ago, we had little more than ambition. We were lucky. Australia provided us with an environment in which, with hard work and perseverance, we were able to build a company that now provides services to millions of Australians and has a remarkable suite of assets” Mr Teoh added.

TPG merged with Vodafone last year after winning a protracted legal battle against the Australian Competition and Consumer Commission (ACCC).

Along with Mr Teoh, his son Shane – who was recently convicted of assault – will also be leaving the board. Mr Teoh’s other son, Jack, will replace him on the board. Company secretary Antony Moffatt will replace Shane. Board member Canning Fok will become the new chair.

Mr Teoh says Mr Fok is “one of the most capable business leaders in the world…”

Management commentary

TPG CEO Iñaki Berroeta said of Mr Fok’s appointment:

Canning brings decades of global executive business and telecommunications experience to the role of Chair, and I believe he will be a strong leader of the board,

With his involvement in the business dating back more than 20 years and his key role in the merger, Canning knows the company well.

I look forward to working with Canning as we lead TPG Telecom into the future.

Mr Fok gave the following words about his appointment.

Very few companies have an opportunity like TPG Telecom to challenge and shape an industry which is so important to the everyday lives of Australians. It’s an honour to be appointed as Chairman at such an exciting point in the company’s history. I admire the work Iñaki and the Executive Team have done to set the company up for the future and it’s clear there are exciting times ahead.

On David Teoh’s tenure, Mr Berroeta said

While David will remain one of the company’s major shareholders, I would like to thank him for the support he showed me, and I wish him well for the future.

Mr Fok also gave words of gratitude to Mr Teoh

David’s legacy is incomparable. He has driven significant change in the Australian market and has carved out a position which TPG Telecom will build on. We are in David’s debt for all he has done.

TPG share price snapshot

The TPG share price is down nearly 28% from this time last year. It is one of a few companies to have not recovered since last year’s COVID-induced market meltdown. Just in the last 6 months, the TPG share price is down nearly 13%.

TPG has a market capitalisation of $12.9 billion.

More reading

• ASX 200 rises, Brickworks builds, Netwealth sinks
• Which ASX 200 shares haven’t recovered from the COVID-19 crash?
• Leading brokers just upgraded these ASX shares to “buy” today
• 3 reasons why Brickworks is a great ASX dividend share
• No ASX dividend share is perfect, but Soul Patts (ASX:SOL) is more perfect than most

Motley Fool contributor Marc Sidarous has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The PointsBet Holdings Ltd (ASX: PBH) share price will be one to watch on Friday. This comes after the company announced it has secured two additional online market access points in its portfolio. At yesterday’s market wrap, the PointsBet share price finished the day at $13.48.

Let’s take a closer look at what the sports betting company announced.

Why the PointsBet share price is in focus

The PointsBet share price could be on the move today following the company’s latest update.

According to PointsBet’s release, its subsidiary PointsBet USA Inc. and Penn National Gaming Inc. (NASDAQ: PENN) have signed an extension of the Online Gaming Services Framework Agreement.

The extended agreement, which was formally executed on 31 July 2019, will see PointsBet secure online sports betting and iGaming market access in Pennsylvania and Mississippi. PointsBet management stated that the total addressable sports betting and iGaming market in Pennsylvania is estimated to be worth over US$1.75 billion per annum.

The transaction will also see PointsBet agree to the early release of disposal restrictions for Penn National Gaming and Penn Interactive Ventures. Previously, these restrictions in the Subscription Agreement were due to expire on 1 August 2021. It was noted though, all other equity restrictions within the framework will remain unchanged.

Details of the expanded partnership agreement

Under the new agreement, PointsBet will have market access in the additional states for a period of up to 20 years. This will commence when the company’s first branded service is offered to PointsBet customers.

In addition, PointsBet will cover all licencing and approval costs associated with launching and operating its services. While Pennsylvania currently permits online sports betting and iGaming, Mississippi requires legislative approval.

Lastly, PointsBet will pay Penn National Gaming a percentage of its net gaming revenues from its Pennsylvania and Mississippi operations.

What did management say?

Penn National Gaming president and CEO Jay Snowden commented:

With the addition of Pennsylvania and Mississippi, we are pleased to expand our market access partnership with PointsBet to seven States. We have a great working relationship with the PointsBet team and are thrilled with the performance of our equity stake in the company since inking the original agreement.

PointsBet group CEO Sam Swanell added:

…Pennsylvania is home to Philadelphia, the fourth largest media market in the United States, inclusive of southern New Jersey and a regional pillar of the Comcast-NBC Universal asset portfolio. NBC Sports Philadelphia owns the in-game broadcast rights to the Phillies, 76ers, and Flyers covering over 290 live events per year across 4.1 million households.

About the PointsBet share price

The PointsBet share price has accelerated by over 780% in the past year, and is up around 14% year to date. The company’s shares reached a 52-week high of $18.13 last month, before retreating to their current level. 

Based on the current share price, PointsBet has a market capitalisation of roughly $2.47 billion.

More reading

• Compared! How are ASX gaming share prices performing?
• ASX 200 crash anniversary: 5 of the best performing shares of the last 12 months
• Bell Potter thinks the PointsBet (ASX:PBH) share price could go 40% higher
• How this week’s Fed meeting could impact ASX 200 shares
• ASX 200 jumps, Pointsbet reveals acquisition, Metcash drops

Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Pointsbet Holdings Ltd. The Motley Fool Australia has recommended Pointsbet Holdings Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Resolute Mining Limited (ASX: RSG) share price has been smashed in 2021.

After crashing 26% lower on Thursday, the gold miner’s shares are now down 45% since the start of the year.

Why is the Resolute share price down 45% this year?

It has seemingly been a case of Murphy’s Law for Resolute Mining this year – anything that could go wrong, has gone wrong.

Disruption at its Syama operation in Mali, a disappointing FY 2020 result, and weak guidance for FY 2021 were already weighing heavily on the company’s shares before this week’s bombshell.

That bombshell was news that the the Ghanaian government has terminated its Bibiani Gold Mine licence. The miner has been told to cease all activities and operations at the site with immediate effect.

While this would be bad news at any point, the timing of it was particularly bad. That’s because the asset is currently being sold to Chifeng Jilong Gold Mining for US$105 million and was expected to complete in the coming weeks.

This sale now looks very unlikely to complete, at least on current terms.

Are its shares good value now?

Analysts at Goldman Sachs believe the selloff has been an overreaction and see a great deal of value in the current Resolute Mining share price.

According to the note, the broker has reaffirmed its buy rating and $1.30 price target on its shares.

This price target implies potential upside of approximately 180% over the next 12 months.

What did Goldman say?

The broker ascribes very little value to the Bibiani asset and hadn’t included its sale in estimates. As a result, it doesn’t see this latest news as an issue.

In light of this, it feels Resolute Mining’s shares are dirt cheap when compared to its overall net asset value (NAV) of $1.30 per share.

The broker explained: “We value Bibiani at US$40mn (A$0.05/sh) as part of our US$150mn (A$0.18/sh) group exploration value. We do not include the Bibiani sale in our estimates, pending deal closure. The sale of Bibiani is not required to meet any debt or liquidity obligations in our view, and we do not view this as an issue currently on our forecasts.”

Strong free cash flow to cover debt repayments

The broker also notes that its current operations should comfortably generate enough cash flow to make debt repayments.

“Resolute’s net debt at the end of 2020 was US$270mn (inc. leases), with US$89mn cash on hand. The first repayment (US$19mn) on the US$150mn term loan is due at the end of September 2021, with 6-monthly payments thereafter. Given strong free cash flow generation from Syama and Mako, we expect RSG will comfortably meet any near-term debt obligations on our forecasts.”

Finally, Goldman notes that the Resolute Mining share price is trading at the largest discount to NAV across its gold coverage.

“After today’s sell-off, RSG is trading at 0.4xNAV (A$1.30/sh), the largest discount across our gold coverage. In our view, the current share price implies no value is being ascribed to any asset apart from Syama Sulphides, which we conservatively model at Reserves only. We retain our Buy rating,” it concluded.

More reading

• 5 things to watch on the ASX 200 on Friday
• Top brokers name 3 ASX shares to sell today
• Why Airtasker, Netwealth, Piedmont Lithium, & Resolute Mining are tumbling lower
• ASX 200 up 0.3%: Brickworks impresses, Resolute hammered, Netwealth crashes
• Why the Resolute (ASX:RSG) share price will be in focus this morning

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Top broker tips Resolute Mining (ASX:RSG) share price to rise 180% from here appeared first on The Motley Fool Australia.

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