GROY is a gold royalty company and is now trading at 42x times' 0.44x Price/ Net Asset Value (NAV) (while peers such as WPM, FNV trade near 1.0). The company does not have any meaningful operating activities, most value creation is from the investment portfolio of gold royalties. Since going public in March 2021, GROY has increased NAV per share by over 40%. The balance sheet is okay with a net debt of $4M. Unlike other large gold royalties, most GROY’s projects are still exploration and development stage, as a result, cash flow generation is not meaningful yet. Only $5M in revenue is expected this year. Its small size also adds significant risk, and momentum is not good with the stock (down 47% YTD). Insiders own 4%. We would keep an eye on GROY, but would wait until most of royalties start generate meaningful cashflow for investors. As for now, we think FNV or WPM are far safer options.
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