Four Listed Investment Companies

Perpetual Equity Investment Company Ltd


PIC Details

Mixed performance: Perpetual Equity Investment Company Ltd (ASX: PIC) recently reported its daily net tangible assets backing per share of $1.016 before tax and $1.020 after tax as at June 16, 2016. PIC further reported growth of net assets per share of 2.1% in May 2016 while the S&P/ASX 300 rose 3.1%. The pretax net tangible assets rose 6.7% during first six months of FY16 exceeding benchmark return (the S&P/ASX 300 accumulation index by 7.1%). PIC had 80.6% of Portfolio invested, as of April 30, 2016. The group reported that they would be cautious of healthcare, domestic banks (structural/cyclical headwinds) and infrastructure (highly leveraged). The group in May monthly update mentioned about health technology companies accounting for 75% of the earnings.
 

PIC’s performance (Source: Company reports)
 
PIC has investments in Woolworths Ltd, Suncorp Group Ltd, Nine Entertainment, BlueScope Steel and Ansys. The recent recovery in the commodity prices drove few stocks which generated good returns in the last six months alone. The group is also holding cash to invest in bargain lucrative opportunities. The stock has corrected 3.65% rise in last one month (as of June 17, 2016) and we believe that PIC stock has the capability to improve in the coming months. Based on the foregoing, we give a “Speculative Buy” on the stock at the current market price of $0.925
 

PIC Daily Chart (Source: Thomson Reuters)
 
Argo Global Listed Infrastructure Ltd 


ALI Details

Challenging market conditions hurting the stock sentiment: Argo Global Listed Infrastructure Ltd (ASX: ALI) recently reported its weekly net tangible assets backing per share of $2.03 before tax and $2.00 after tax as at June 10, 2016. ALI recorded accounting loss of $9.7 million after downward revaluation of the investment portfolio in December 2015. But, over the March quarter, ALI’s net tangible assets backing rose 3.0% ahead of its benchmark index return of 2.3%. Moreover, the recovering global markets have driven the stock by 11.9% in last six months (as of June 17, 2016). On the other hand, ALI has major investments in infrastructure portfolio of 50-100 stocks, which includes global listed infrastructure securities (80-100%), global infrastructure fixed income securities (0-20%) while the company holds a cash in A$ (0-5%).
 

Sector diversification (Source: Company Reports)
 
The recent weak payroll data in the US coupled with uncertain outcome of Brexit have led to rising volatility in the markets this month which could also impact the ALI stock performance. Accordingly, we believe that the stock could face pressure in the coming weeks and hence recommend the stock to be “Expensive” at the current market price of $1.85
 

ALI Daily Chart (Source: Thomson Reuters)
 
Praemium Ltd


PPS Details

Growth in FUA: Praemium Ltd (ASX: PPS) reported a strong first six months of the 2016 with revenues rising 35% to $14.7 million and net profit of $1.3 million. Its Australia unit reported 21% rise in EBITDA, while UK business sales grew 119% with 50% rise in EBITDA. The group’s global funds under administration increased by 23% to $4.5 billion for March 2016 as compared to the same period of last year despite volatile market conditions while its Australian investment platform (SMA) surpassed $3 billion of funds under administration. PPS has won the best international platform of the year at the International Adviser Product and Services Awards.
 

Funds under administration, platform & funds (Source: Company reports)
 
The company also has strong balance sheet with $11.2 million in cash and no debt. During the first half, the company launched SMSF compliance and accounting investor portal to expand its business. PPS has generated 7.1% returns during this year to date (as of June 17, 2016) and we believe the positive momentum in the stock would continue despite challenges this month. Accordingly, we advise a “Buy” on the stock at the current market price of $0.29
 

PPS Daily Chart (Source: Thomson Reuters)
 
WAM Capital Ltd 


WAM Details

Focus on investing in growth companies:WAM Capital Ltd (ASX: WAM) reported that WAM investment portfolio rose 5.1% in the month of May 2016 outperforming S&P/ASX All Ordinaries Accumulation Index by 2%. WAM witnessed a 248.5 % increase in operating profit before tax to $103 million for the half year ended December 2015. Its investment portfolio rose 25.6% for the 12-month period to 31 December 2015, outperforming the S&P/ASX All Ordinaries Accumulation Index by 21.8%.
 

Strong dividend history (Source: Company reports)
 
The company also declared a fully franked interim dividend of 7.25 cents, an increase of 3.6% over the previous corresponding period. WAM also announced that WAM Leaders IPO raised record $394.3M. WAM has been consolidating this year and generated over 0.47% (as of June 17, 2016) returns during this year to date. But, the stock is trading at an attractive valuation with reasonable P/E and appealing dividend yield. We believe that WAM would continue to deliver value to its shareholders in the coming months and accordingly recommend a “Hold” at the current market price of $2.17
 

WAM Daily Chart (Source: Thomson Reuters)

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