In today’s daily we have covered stock research on TPG Telecom (Expensive).













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The S&P 500 was up by 0.49 points or 0.04%on Friday to 2039.82 points.  U.S. stocks posted a fourth straight week of increases but ended Friday little changed aslosses in healthcare shares offset gains in energy. Apple shares rose 1.2 percent to $114.18, another record high. The stock lifted theNasdaq, which outperformed other indexes. Biotech stocks were among biggest decliners in the S&P health care index which fell 0.8 percent and was the biggest drag on the S&P 500. 

For the week, theDow and S&P 500 rose 0.4 percent and the Nasdaq climbed 1.2 percent. Nordstrom was one of the best performing stocks on the benchmark S&P 500 after the high end retailer reported better than expected third quarter results. Retailers such as Macy’s which owns luxury department store Bloomingdale’s, and JC Penny blamed warm weather in the third quarter for lackluster results as consumers waited to purchase coats and outerwear stocked for the autumn.
 


Nordstrom Daily Chart (Source – Thomson Reuters)
S&P ASX 200was up by 11.6 points or 0.21%on Friday and closed at 5454.3 points. Over the past week, the benchmark S&P/ASX 200 fell 94.8 points, or 1.7 per cent, to 5454.3. The broader All Ordinaries dipped 88.3 points, or 1.6 per cent to 5433.8.Energy shares on the local market had a rough week as a result; Santos slipped 6.3 per cent to $11.98, Origin Energy lost 6.3 per cent to $13.63 and Oil Search finished the week 5.8 per cent lower at $8.19.
GrainCorpshares have finished the week 4.9 per cent lower at ­$8.09, following a 64 per cent dive in full-year profit, thanks largely to $44 million in one-off charges. Department store Myer was down 5.6 per cent at $1.785 to round out the week. The retailer reported near-flat sales growth of 0.1 per cent in the first quarter. Shares in struggling free-to-air broadcaster Ten Network finished the week down 1.9 per cent to 26.5¢. 

Graincorp Daily Chart (Source – Thomson Reuters)
 
Top Performers on the ASX 200 were :-


 
Stock of the Day - TPG Telecom (Expensive)

TPG continues to generate strong organic subscriber growth in consumer broadband, margin expansion in corporate and early wins from the acquisition of AAPT. Earnings guidance for FY15 which was 4% ahead of pre result expectations implies that this momentum will continue next year. Around 50 % of TPG’s earnings will come from the corporate division inn FY15 following the organic growth in the segment as well as the acquisition of AAPT.


Financial Highlights (Source - Company Reports)

TPG remains aggressive in the corporate space looking to leverage its network  footprint to a greater customer base  - giving it a unique scale advantage against smaller competitors and price schedule that is difficult to match foot he incumbent players. TPG is ramping up its product offering as it targets continued customer growth. TPG is also developing new products for the SMB market where it hasn’t had a strong presence historically.


NPAT + EPS (Source - Company Reports)
 
TPG’s mobile phone business stalled for subscriber growth in FY14, as TPG rationalized its offering following the renegotiation of its wholesale arrangements. Having said that margins did expand in the second half of FY14 which drove a moderately improved earnings contribution. TPG’s corporate division delivered underlying EBITDA growth of 15.2% during second half FY14.


TPG Telecom Daily Chart (Source - Thomson Reuters)

AAPT delivered underlying EBITDA of $38.2m for the 5 months of operation which annualizes at $92m. Further realization of synergies is likely  to be only partly offset by customer losses as TPG rationalizes its product offering, overall suggesting that this business can contribute comfortably north of $100m per annum as integration completes. We believe the stocks is expensive at the current price and would review the stock at a later date.



 
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