NST’s earnings result was strong, with underlying earnings coming in 10% ahead of our estimates. The positive earnings result and NST’s strong cash position has enabled a boost to the final dividend, with the A$0.40/share payout for the year equivalent to a 2.6% yield. We have increased our payout ratio to reflect increased returns, which should boost NST’s yield to 3.5% over the next two years. Guidance ranges for FY25 had been pre-released and remain unchanged, with the exception of new guidance for depreciation. We have cut our earnings forecasts for NST to reflect the higher depreciation charges, however as these changes are non-cash, our A$18.00 price target remains unchanged, and we reiterate our BUY rating on NST. Progressing the KCGM mill expansion remains a key focus for management. Updates on the drilling at the Hercules discovery could provide evidence that there is material upside to the production outlook for KCGM through the additional of satellite ore feed, pushing the long-term outlook for KCGM beyond 1.0mozpa.
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