Generation Development Group Limited (ASX: GDG)

Listed on ASX in 2007, GDG is a pooled development fund. It caters to the retail sector in Australia by providing marketing and management of life insurance and life investment products and services. It also offers administration services in the financial services industry.

Financial Update for H1FY22 – For H1FY22, the underlying life/administration business NPAT stood at $3.3 million, a substantial increase of 57% from the corresponding prior period, followed by significant funds under management (FUM) growth and revenue jump of 43% PcP to $17.5 million. GDG recorded 45.2% of market inflows, the highest among industry peers, improving market share to 20.2%. GDG entered the half-year with a robust cash balance of $18.5 million and declared an interim dividend of 1 cent/share for the period.

Operational Update for H1FY22 – GDG continued to develop across several key segments. Approved Product Lists surged by 20%, Active Financials Advisers expanded by 21%, and New Bond Numbers grew by 64%. GDG retained Highly Recommended ratings with Lonsec and Zenith for its flagship investment bond offerings.

Valuation Methodology: Price/Book Value Multiple Based Relative Valuation (Illustrative)

Source: Analysis by Kalkine Group

*% Premium/(Discount) is based on our assessment of the company’s NTM trading multiple after considering its key growth drivers, economic moat, stock’s historical trading multiples versus peer average/median, and investment risks.

Technical Analysis: GDG prices moved up significantly from the past year and are currently trading in a primary bullish trend. The stock is currently hovering above its trend-following indicators 21-period and 50-period SMA on a weekly chart that further indicates the bullish direction for the stock. Prices are also breaking their downward sloping trend line by upside, and the prices are sustaining above the same from the past three weeks’ further showing bullishness. RSI (14-period) is hovering at ~56.871 on a daily chart, indicating bullish momentum for the stock prices. Immediate support levels are AUD 1.370 and AUD 1.270, while immediate resistance levels are AUD 1.680 and 1.880.

Stock Recommendation: The stock of GDG gave a positive return of ~94.805% in the past year. The stock is currently trading higher than the 52-weeks average price level band of $0.720 - $1.600. The stock has been valued using the Price to Book multiple-based illustrative relative valuation method and arrived at a target price with an upside of low double-digit (in percentage terms). Considering the global tension and peer competitiveness, the company might trade multiple average at some discount to its peers’ Price to Book Value. For valuation, few peers like Medibank Private Ltd (ASX: MPL) and PSC Insurance Group Ltd (ASX: PSI), and others have been considered. Given the decent fundamental run, improved FUM, expanding top-line, current trading levels, upside indicated by valuation, and key risks associated with the business, we give a “Speculative Buy” recommendation on the stock at the closing market price of $1.500, up by ~3.448%, as of 21st March 2022. However, the risk levels are high considering capital market risks and ongoing Ukraine and Russia war, and its cascading effect globally. Markets are currently trading in a highly volatile zone due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.

Daily Technical Chart – GDG

Source: REFINITIV

Bailador Technology Investments Limited (ASX: BTI)

BTI is an investment company with a portfolio of assets in the information technology and media sectors. It pursues investments in expansionary-stage companies, focusing on e-commerce, subscription-based internet business, online marketplace, online education, and telecommunication applications.

Business and Financial Update for H1FY22 – On 11th March 2022, BTI announced to agree to sell all the securities in SMI for circa $20 million cash, representing an uplift of ~67% to the current varying value of SMI. In H1FY22, net profit attributable to shareholders surged 172% to $35.7 million PcP. Gain on financial assets and marketable securities advanced by 178% PcP. The company executed a successful IPO of SiteMinder (ASX: SDR), including a 21% uplift to BTI’s listing valuation and $15.1 million partial cash realisation at a 44% internal rate of return.

Technical Analysis: After making new 52-week high levels of AUD 1.875 in October 2021, BTI stock prices fell significantly from the higher levels. Now, the stock is trading below its 21-period SMA on a monthly chart taking resistance of the same indicating weakness on charts. Volumes have increased in recent months, with a decrease in prices indicating a short build-up in the stock prices. RSI (14-period) is hovering at ~41.186 on a daily chart, indicating weak stock price momentum. Immediate support levels are AUD 1.135 and AUD 1.060, while immediate resistance levels are AUD 1.283 and AUD 1.360.

Considering the recent sale of securities in SMI, constant updates on recent events, directionless movement, investing in this stock at such uncertain levels should be taken with a calculated approach; hence a ‘Watch’ stance is suggested. The stock was analysed as per the closing price of AUD 1.250 per share, up by ~0.603%, as of 21^st March 2022.

Investors can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario.

Weekly Technical Chart – BTI

Source: REFINITIV

Note 1: The reference data in this report has been partly sourced from REFINITIV.

Note 2: Investment decisions should be made depending on the investors’ appetite for upside potential, risks, holding duration, and previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the valuation has been achieved and is subject to the factors discussed above.

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where the stock prices tend to find resistance when they are rising, and the uptrend may pause due to profit booking or selling interest. 

The Green colour line reflects the 21-period moving average. SMA helps to identify existing price trends. If the prices are trading above the 21-period, then it shows prices are currently trading in a bullish trend (Vice – Versa).

The Blue colour line reflects the 50-period moving average. SMA helps to identify existing price trends. If the prices are trading above the 50-period, then it shows prices are currently trading in a bullish trend (Vice – Versa).

The Yellow colour line represents the Trendline.

The Purple colour line in the chart’s lower segment reflects the Relative Strength Index (14-Period), which indicates price momentum and signals momentum in trend. A reading of 70 or above suggests overbought status, while a reading of 30 or below suggests an oversold status.

Disclaimer - This report has been issued by Kalkine Pty Limited (ABN 34 154 808 312) (Australian financial services licence number 425376) (“Kalkine”) and prepared by Kalkine and its related bodies corporate authorised to provide general financial product advice. Kalkine.com.au and associated pages are published by Kalkine.

Any advice provided in this report is general advice only and does not take into account your objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your objectives, financial situation and needs before acting upon it.

There may be a Product Disclosure Statement, Information Statement or other offer document for the securities or other financial products referred to in Kalkine reports. You should obtain a copy of the relevant Product Disclosure Statement, Information Statement or offer document and consider the statement or document before making any decision about whether to acquire the security or product.

You should also seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice in this report or on the Kalkine website. Not all investments are appropriate for all people.

The information in this report and on the Kalkine website has been prepared from a wide variety of sources, which Kalkine, to the best of its knowledge and belief, considers accurate. Kalkine has made every effort to ensure the reliability of information contained in its reports, newsletters and websites. All information represents our views at the date of publication and may change without notice.

Kalkine does not guarantee the performance of, or returns on, any investment. To the extent permitted by law, Kalkine excludes all liability for any loss or damage arising from the use of this report, the Kalkine website and any information published on the Kalkine website (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine hereby limits its liability, to the extent permitted by law, to the resupply of services.

Please also read our Terms & Conditions and Financial Services Guide for further information.

On the date of publishing this report (referred to on the Kalkine website), employees and/or associates of Kalkine and its related entities do not hold interests in any of the securities or other financial products covered on the Kalkine website unless those persons comply with certain safeguards, procedures, and disclosures.

Kalkine Media Pty Ltd, an affiliate of Kalkine Pty Ltd, may have received, or be entitled to receive, financial consideration in connection with providing information about certain entity(s) covered on its website.