In today’s daily we have covered stock research on OZFOREX  (BUY).











 
The S&P 500 was up by 3.30points or 0.15%on Thursday to 2051.87 points. Best Buy Co. jumped 6.4 percent as demand for televisions and tablets helped the retailer post a surprise sales gain. Dollar Tree Inc. advanced 5.1 percent after reporting third-quarter earnings that beat analysts’ estimates. Energy stocks rose the most of 10 groups in the S&P 500 as crude oil gained for the first time in four days. Intel Corp. led chipmakers higher after raising its dividend.

FTSE Eurofirst 300 fell 0.3 per cent to close at 1,356.38 – although that was well off the day’s low of 1,347.57. In the eurozone, however, the “flash” estimate of November’s composite purchasing managers’ index came in at 51.4, down from 52.1 and the lowest since July 2013. The manufacturing PMI eased to 50.4 from 50.6 while the services index declined a full point to 51.3. We expect weaker global manufacturing activity to continue to exert moderate downward pressure on China’s manufacturing PMIs in the next few months.


Best Buy Daily Chart (Source – Thomson Reuters)
S&P ASX 200was down by 52.6points or0.98%on Thursday and closed at 5316.2 points. The big miners weighed heavily on the market, with BHP tumbling 2.6 per cent to $31.80 and Rio sinking 2.7 per cent to $56.41, as both stocks hit 2014 lows. Mt Gibson ended flat at 40¢, BC Iron crashed 4.35 per cent to 55¢, Arrium sank 5.77 per cent to 24.5¢ and Gindalbie dropped 4 per cent to 2.4¢.
Pacific Brands finished flat at 51.5 cents while Wesfarmers dived 1.8 per cent to $42.10. Competitor Woolworths crashed 3 per cent to $31.30. Fisher & Paykel rose 2.15 per cent to $5.23 on news its first-half net profit rose 10 per cent to $48.917 million and that it would pay a dividend of 5.8 cents, up from the year-earlier 5.4 cents. Flexigroup plummeted 11.82 per cent to $3.06. SPI futures are up 13 points to 5330. The Australian dollar is trading at US86.29¢, compared with US85.93¢ at Thursday’s local close.  Iron ore was up 1.1% at $US70.97 a tonne.
 

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


 
Stock of the Day - OzForex (BUY)

OzForex (OFX) recently reported that the Company has progressed well to meet its 12-month September 14 prospectus financial forecasts. Its FY14 result has continued to have historical growth trend. As per FY14 updates, the Company announced a dividend of 2.375 cents per share fully franked. The EBITDA was 4.3% ahead of pro forma prospectus forecast and 8.1% ahead on a statutory basis.




OFX provides a complete set of services to meet the international payment needs of consumers and businesses, and proffers international payment solutions to partner companies. The Company generates income by taking a foreign exchange spread on each transaction and transaction fees without taking any stand on the direction of the FX market. As part of the operational highlights, the Company has enhanced mobile site visits under its FX brands by 292% to 3.4m. Mobile site registration numbers under FX brands rose by 175% to 8000. The activated Travel Cards reached 15,000. The annual operational efficiency gains of 33% have been delivered due to continued rollout of reconciliation engine.

The Company witnessed growth for Q1 FY15 across all key performance indicators. The growth in revenue and profit is expected to emanate from organic means through partnerships and strategic acquisitions. New dealing client performance was built on the growth in existing and new geographies along with branded partnerships. In fact, the active client growth for FY14 was seen to be strong.


New Dealing Clients (Source – Company Reports)

Transaction growth also continued to have historical trend. Transaction growth for 1Q FY15 is reported to be a continuation of the historical quarterly growth. As per FY14 updates, the Company reported that the turnover performance strengthened by an 18% increase in average transaction value (ATV) on FY13. Q1 FY15 turnover of $3.5 billion is a 9% rise on prior corresponding period.


Turnover (Source – Company Reports)

As part of the Company’s strategy, OFX aims to expand geographically while providing enhanced product offerings and scaling up of existing operations.

OFX has been able to service customers in 28 states under the USForex brand which indicates a huge license footprint as at 3Q FY14. The Company can service customer from all but 5 US states and customers under the Travelex brand in 12 US states, as at the end of 1Q FY15. Growth in the US has been strong on the back of ongoing improvements in digital marketing and the introduction of new channels such as direct sales and alliance partnerships.

Over 120,000 clients have trusted OFX with their international Payments in the last 12 months.


Growth in Fee and Commission Income (Source – Company Reports)

The Company has emphasized on geographic expansion of the Group’s international payment services, which appears to progress well through locally tailored marketing campaigns, recruitment of local sales and service staff, and expansion of referral network and partners. Across the key regions, OFX has grown Fee and Commission Income by 74% in North America, 30% in Europe, 100% in Asia, and 38% in Australia and New Zealand, as per FY14 updates. The Company has also extended its international payment solutions footprint with two of strategic partners, Travelex and MoneyGram. MoneyGram branded partnership has started in Australia and New Zealand. The Company has rolled out the Travelex branded partnership beyond the UK, to now include Australia, New Zealand, Canada and the US.

The Company has a robust balance sheet with no external debt and strong cash flow conversion across the business. In FY14, OFX was also exploring the opportunity to acquire UK based HIFX Limited which would have provided significant scale to the Company’s European operations and positioned the combined entity as a clear global leader in international payments. The Company could not proceed with the transaction but aims to explore more of such opportunities.

The overall game plan is thus electrifying, and accordingly, we are putting a BUY recommendation for this stock at the current price of $2.15.

 
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