Four diverse stocks to buy or hold

Macquarie Atlas Roads Group


MQA Details

Improved performance with rise in traffic: Macquarie Atlas Roads Group (ASX: MQA) reported that its 1H16 results entailed 6% growth in revenue and 4.2% rise in traffic owing to higher volumes and toll increases on Autoroutes Paris-Rhin-Rhone (APRR) and Dulles Greenway. 1H16 profit from operations has been up to $54.2 million against prior corresponding period’s $40.3 million. The group has announced for FY17 distribution guidance of 20 cents per share, which is up 11% on FY6. MQA earlier announced about the completion of sell down of Macquarie Group’s stake in MQA. About 53 million securities have been sold at $5.32 per security to a range of institutional investors. Macquarie interest in MQA post the sell-down is said to be about 11%. MQA also divested two of its six assets and is continuing to see traffic growth in the US.
 

APRR EBITDA and France GDP Growth (Source: Company Reports)
 
MQA delivered 19.8% returns during this year to date (as of September 27, 2016). We believe the stock has more momentum and accordingly, we maintain a “Hold” recommendation on this dividend yield stock at the current price of $4.98
 

MQA Daily Chart (Source: Thomson Reuters)
 
Vmoto Ltd


VMT Details

Weakness in 1H16 results but 2H16 expected to be stronger: Vmoto Ltd (ASX: VMT) reported for drop in revenue for 1H16 to $17.8 million from $24.9 million of 1H15 while net loss was $597,472 against 1H15 NPAT of $1 million. There has been a slow-down in sales of lower value electric two-wheel vehicles in Vietnam and Africa, which impacted the results to some extent. VMT clarified that local Chinese government restrictions have not been material to unit sales. On the other hand, the cash at bank is $4.6 million. The group has also formed a new subsidiary with PowerEagle in Shangai and the same is now operational. VMT has also commenced shipment for orders to a significant European supermarket group that has over 300 stores in Europe. VMT’s client LOOPShare Ltd had got successfully listed on TSX Venture Exchange in Canada and secured funding in July 2016. VMT has launched the marketing campaign “Ride Your Way” in Australia via online social media to drive traffic to Vmoto’s internet based online sales platform to offer electric vehicle products. Additionally, VMT has made the market entry, distribution and customer opportunities, for regions including North America, Netherlands, France, Mexico, Nepal, Thailand, Uruguay and Sri Lanka. The group is expecting the second half of the year to be stronger than first half which was operationally a busy period. The stock has fallen 18.75% in last one month but rose 4% in last five days (as on September 27, 2016). We give a “Speculative Buy” recommendation on the stock at the current price of $0.13
 

VMT Daily Chart (Source: Thomson Reuters)
 
Nearmap Ltd


NEA Details

Strong FY16 performance: Nearmap Ltd (ASX: NEA) has delivered successfully on three key priorities for FY16 that entail accelerated growth in Australian business, foundations built for success in the US and technology leadership enhancement, and the revenue growth has been witnessed over the last four consecutive halves. The Australian business demonstrated about 38% growth in ACV portfolio while estimated lifetime portfolio value is of $338M. In fact, there has been a 63.6% year on year growth in subscription ACV values of top 10 Australian customers. For the US, closing ACV portfolio of US$1.5M with key customer wins from competitors was reported. NEA’s growth was based on disciplined cost management in H2 FY16 with expenses down on H1 FY16 while there was a 38% growth in receipts from customers in FY16. NEA’s business is well-funded with $12.2M of cash at year end. The group’s HyperCamera2 has gained attraction as the system will allow to capture, process and publish 3D models of what is on the ground which will add value to the customers who use these models in their planning, assessments and quoting. NEA earlier signed a significant new one-year subscription contract (annual value of $1.1 million) with an existing customer, which is one of Australia’s largest digital infrastructure companies.
 

Revenue Growth (Source: Company Reports)
 
Meanwhile, the stock has surged 51.3% this year to date (as of September 27, 2016). We give a “Buy” recommendation on the stock at the current price of $0.585
 

NEA Daily Chart (Source: Thomson Reuters)
 
Rhipe Ltd


RHPDetails

Top-line growth: Rhipe Ltd (ASX: RHP) stock fell over 9.71% in the last one month (as of September 27, 2016). On the other hand, RHP has won three Microsoft Australia Partner Awards and has been the only partner to win the awards this year. The group’s revenue has been up 32% to $143 million while licensing sales have grown 38%. Further, the gross margin has been up while the underlying licensing EBITDA is up 40% to $7.1 million. The group’s investments have been strong. For instance, RHP witnessed SEA revenue growth of 87% while LSP has been profitable at 30 June 2016 and LiveTiles is partially monetised with profit of $2.4m. The group is debt free and expects to have FY17 reported EBITDA of $5 million.
 

Financial Performance (Source: Company Reports)
 
We believe the correction in the stock placed them at reasonable levels. We give a “Speculative Buy” recommendation on the stock at the current price of $0.95
 

RHP Daily Chart (Source: Thomson Reuters)

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