FIVE STOCKS TO LOOK AT

Super Retail Group Ltd

SUL Dividend Details
 
Solid sports segment contribution:For the full year 2015, Super Retail Group Ltd (ASX: SUL) recorded a 7.1% increase in its group sales to $2.24 billion with a major contribution from sports segment. SUL made $90 million investments for future growth in new and refurbished stores and the development of multi-channel business capabilities.
 

2015/2016 trading update (Source: Company reports)
 
Looking ahead, the company expects to open around 10 to 15 new stores in the Auto Division and refurbish up to 65 stores during the financial year. In the Leisure Division, it forecasts to open five and refurbish 20 BCF stores while in the Sports Division, SUL intends to open six to eight new stores, relocate four stores, close seven stores and refurbish about 10 to 15 stores. Group EBIT margin is likely to improve as a result of improvements in gross margin and a reduction in the operating costs incurred on the group’s strategic programs.  With a decent dividend yield and strong company developments, we rate the stock a Buy at current share price of $10.04
 
 
SUL Daily Chart (Source: Thomson Reuters)
 

Webjet Ltd

WEB Dividend Details
 
Ongoing TTV growth: Recently, Webjet Ltd (ASX: WEB) announced market guidance for 2015/2016 financial year with $33.5 million EBITDA indicating an approximate increase of 20% from last year after $3 million investment in B2B. The $3 million investment as advised to the market in August is a driving force behind the substantial development of its digital B2B business in North America and Europe. For the full financial year 2015, Total Transaction Value (TTV) was $1,266 million, an increase of 31% compared to the previous corresponding period driven by record monthly TTV reported for the Webjet business, the acquisition of the SunHotels business in July 2014, and the accelerated growth of Lots of Hotels.
 

Ongoing diversification of earnings stream (Source: Company reports)  
 
Reported EBITDA was up 20% while profit before tax was up 10%. The company has a strong balance sheet with net equity of $82.5 million, up $13.2 million since June 2014 while Cash balance at the end of the year stood at $76.2 million, with generated cash and equivalents of $37.7 million during the year. We put a Buy on WEB at the current share price of  $5.40
 
 
WEB Daily Chart (Source: Thomson Reuters)
 

Metcash Ltd

MTS Details
 
Decreasing costs to partly offset competition pressure:For the first half of financial year 2016, Metcash Ltd (ASX: MTS) recorded sales revenue of $6.6 billion, an increase of 1.4% from previous year. But, the group’s reported profit after tax increased 20% to $122 million as its efforts to control costs were paid off, even though underlying EBIT dipped 12.7% to $133.7 million. While there was an improvement in both the Liquor and Hardware profit, this was more than offset by the decline in Food & Grocery, which was impacted by the incremental investment in price in first half 2016. However, MTS balance sheet strengthened with gearing reducing to 25.4% from 36.6% in financial year 2015 and net debt reduced 34.8% to $435.3 million from financial year 2015 levels. Also, the company's Working Smarter program commenced which is designed to reduce complexity and deliver savings of approximately $100 million per annum by financial year 2019. We believe the stock has the potential to grow from the current levels and hence give a Hold at the current share price of  $1.795
 
 
MTS Daily Chart (Source: Thomson Reuters)
 

Ziptel Ltd

ZIP Details
 
Successful product launch driving growth:In its recent note to shareholders, Ziptel Ltd.’s (ASX: ZIP) chief executive stated that 2015 was a transformational year for the company with the launch of its revolutionary mobile communication application Zipt. It has achieved significant growth with 6 million installs achieved in 29.5 weeks - putting installations well ahead of the initial target of 10 million in 18 months. Based on the current run rate, Zipt is on track to achieve target of 10 million installs within 10 months. The company also recently announced for commencement of its Zipt Mark 2 Platform on both Android and iOS.
 

Zipt Installs - Current and projected (Source: Company reports)
 
Additionally, in December 2015, ZIP announced an enterprise agreement with leading global satellite communications service provider, SpeedCast to white label the Zipt application and provide a calling and messaging solution to remote satellite locations and sea vessels under the product name “Speedtalk”. Speedtalk has been stated to be launched in first quarter 2016 and is expected to provide a near term revenue generation opportunity for the company.  Based on the foregoing, we give this stock a Speculative Buy at the current share price of  $0.495
 
 
ZIP Daily Chart (Source: Thomson Reuters)
 

Eureka Group Holdings Ltd

EGH Details
 
Focusing on retirement living village:Eureka Group Holdings Ltd (ASX: EGH) recently announced its final rental retirement village acquisition for calendar year 2015 and entered into a conditional contract for the acquisition of a 60-room village in Salisbury Adelaide from an unlisted property trust for $3.1 million and the associated business from the current operator for $1.5 million. The expected annualized EBITDA for the village is between $650,000 and $700,000. The Salisbury village is full with a waiting list and at a price of $4.6 million meets the company's targeted unlevered EBITDA return of around 15%. Meanwhile, EGH recorded EBITDA of $4.1 million, an increase of 173% for FY15 against the previous financial year led by revenues of $12.21 million which was higher by 14.5%. The group posted a net profit after tax of $3.10 million, a 369% improvement, and basic earnings per share increased to 2.24 cents, a 180% rise from 0.80 cents.  We believe EGH has the potential to rise further in the coming months and accordingly give a Speculative Buy at the current share price of  $0.53
 
 
EGH Daily Chart (Source: Thomson Reuters)

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