Buy, Sell or Hold - NAB, TAH, JHG

National Australia Bank Ltd

Decent Outlook Ahead: The top management of National Australia Bank Limited (ASX: NAB) has reflected the positive outlook for the long-term. When the bank released its metrics for the 3Q 2018, the management stated that the company is now focusing on achieving customer satisfaction. The bank has been making deployments with regards to the growth initiatives. The bank recorded a decent performance in Q3 2018. An upward trend was visible in the bank’s top line number amid increased wholesale funding costs (short term) in Q3 2018. Other metrics like balance sheet as well as asset quality were also robust during the same period.


Financial Highlights (Source: Company Reports)

The group’s CET 1 (Common Equity Tier 1) ratio stood at 9.7% in Q3 2018. National Australia Bank’s cash earnings were negatively impacted in Q3 2018 because of a rise in the credit impairment charges as well as investment spending. However, the group witnessed the positive impacts from New Zealand banking as well as from the SME (small and medium enterprises) lending in business and private banking.

Meanwhile, the Moving Average Convergence Divergence or MACD has been applied on the monthly chart of National Australia Bank by considering the default values. MACD line has crossed the signal line and is moving downwards. This momentum is expected to continue moving forward. As a result, we maintain our “Hold” rating on NAB at the current market price of A$27.200. On October 3, 2018, the stock declined by 0.73%.
 

Tabcorp Holdings Limited

Expecting Bullish Momentum: Tabcorp Holdings Limited (ASX: TAH) combined with the Tatts Group and, according to the management, the integration has been as anticipated. The improvements, as well as EBITDA (earnings before interest, tax, depreciation, and amortization) synergies, are also going on the expected pace. The company unloaded its loss-making businesses. In July 2018, the company exited Sun Bets and in December 2017, it announced the closure of Luxbet. In 2H 2018, the company’s strong performance was witnessed on the back of lotteries & Keno as well as Wagering and Media. The company’s management expects that it could witness strong momentum moving forward helped by the digitization and launching of the new products. However, the company has also renewed some licences which could also support future growth.

 

EBITDA Trend (Source: Company Reports)
Two technical indicators, MACD and exponential moving average (EMA), have been applied on the monthly chart of Tabcorp Holdings by incorporating default values. MACD line has just crossed the signal line and is expected to move upwards representing bullish crossover. In addition, the stock price has also crossed the EMA and is expected to move upwards. Given the potential and trend, we maintain our “Buy” rating on the stock at the current market price of A$4.820.
 

Janus Henderson Group Plc

Decent Performance in Q2FY18: Janus Henderson Group Plc (ASX: JHG) reported decent performance in Q2 2018 ending on June 30, 2018. As per the management, the integration within the company has been accelerating and is exceeding the expectations. The company witnessed the positive impacts from the investments and ended the quarter with total AUM amounting to US$370.1 billion. The positive momentum in the markets got offset by the foreign exchange losses as well as net outflows.

Of the total AUM as of June 30, 2018, Janus Henderson had US$193.3 billion in the equity asset class and this represents the highest proportion among the asset classes. Other asset classes like fixed income, quantitative equities, Multi-asset, and alternatives have US$76.5 billion, US$50.1 billion, US$32.6 billion and US$17.6 billion, respectively. Moving forward, if the equity market falls, it could severely impact the company’s performance. The equity markets are exposed to several risks like geopolitical risks, macroeconomic factors, etc.

 

Janus Henderson Group’s AUM as of June 30, 2018 (Source: Company Reports)

In the meantime, the technical indicators like MACD and exponential moving average have been applied on the daily chart of JHG and the default values have been used. MACD line crossed the signal and is moving downwards representing bearish crossover. The stock price has also crossed the EMA and is moving downward. Thus, we maintain our “sell” rating on the stock at the current market price of A$36.320 in view of the absence of any key catalyst.
 

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