FlexiGroup Limited
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FXL Details
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Issued a lower than estimated outlook: FlexiGroup Limited (ASX: FXL) stock plunged over 6.8% on May 31, 2016 as the group issued a lower than estimated guidance. The group reported a FY16 guidance cash NPAT of $97m while expects to return to the double-digit growth only from fiscal year of 2018. But, for FY17 the group expects its cash NPAT to be only over $100 million. The group expects FY16 statutory NPAT to fall by 35% against prior corresponding period. On the other hand, FXL has been a strong dividend player while the management reported that FY16 dividend is expected to be in the range of 50% to 60% of cash NPAT and the asset write-off would not impact their dividend payment. Moreover, the group is focusing on its core (high ROE) business units of Cards, Certegy and Leasing while intends to offload non-core (low ROE) business units of Blink, Think Office Technology and Flexi Enterprise. FXL has also recently invested in Fintech lender Kikka Capital.
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Recommendation: We put a “Speculative Buy” on this dividend yield stock at the current price of $2.015
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Transitioning business (Source: Company Reports)
GWA Group Ltd
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GWA Details
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Ongoing pressure: GWA Group Ltd (ASX: GWA) stock fell over 2.1% on May 31, 2016 as the group reported a cancellation of 265.36 million shares. But, we believe the challenges in the stock would continue given the rising competition coupled with slowing housing boom.
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Recommendation: We maintain our “Expensive” recommendation on the stock at the current price of $2.25
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