Propel Funeral Partners Limited

Acquisition of Graham’s Funeral Services: Propel Funeral Partners Limited (ASX: PFP) is a provider of death care services in ANZ. PFP announced that it has inked a conditional sale agreement to acquire the Graham’s Funeral Services, and certain freehold properties, in the North Island of New Zealand for a purchase price of approximately NZ$7.28 million in cash and 227,510 ordinary shares in the capital of Propel to be issued at A$3.07 each (i.e. the AUD equivalent of NZ$0.75 million), subject to escrow arrangements for 3 years. In addition, an amount of up to NZ$0.50 million in cash will be payable if certain financial milestones are achieved during the 3 years, following the completion of proposed transaction. This acquisition is expected to increase the Propel’s annualised revenue by circa 2.1% in coming times.

Dividend Distribution and AGM: The company declared a dividend of 5.8 cents per share on PFP ordinary fully paid securities, which was paid on 4 October 2019. The 2019 Annual General Meeting of Propel Funeral Partners Limited will be held on 19 November 2019 to discuss the financial report, directors’ report and auditor’s report and other important agendas.

Significant Rise in Revenue and operating EBITDA: During the year ended 30 June 2019, revenue of the company increased by 17.6% on FY18 from $80.9 million to $95.1 million, primarily driven by eight acquisitions, which were completed in FY18 and FY19, along with the solid ARPF. Operating EBITDA soared by 10.6% on FY18, mainly due to the impact of eight acquisitions completed in FY18 and FY19, and LFL operating cost, which was up by 1% from the prior period.


Revenue per funeral growth (Source: Company Reports)

Future Expectations: PFP is well-positioned and focussed on its growth strategy and has started FY20 on a positive note.Propel achieved ARPF growth within its target range of 2% to 4%. The company is well placed to benefit from acquisitions completed and announced other potential future acquisitions during the period. It is also well-positioned to benefit from funeral volumes reverting to the long-term trends.

Stock Recommendation: The net margin of the company stands at 12.9%, higher than that of -17.6% in FY18, implying that the company has improved its capabilities to convert its top-line into bottom-line. Resultantly, RoE of the company stands at 6.8%, higher than the previous period of -12.6%. The company showed a CAGR of 70.86% in revenue in the time span of FY15 to FY19 and also witnessed a CAGR of 63.43% in gross profit in the same period. Currently, the stock is trading at a price to earnings multiple of 24.360x. As per the ASX, the company’s stock is trading above the average of its 52-week high and low. Hence, considering the above parameters and current trading levels, we recommend a “Hold” rating on the stock at the current market price of $3.050 per share, down 0.327% on October 22, 2019.
 

Redbubble Limited

Launch of ADR Program: Redbubble Limited (ASX: RBL) owns and operates Redbubble and TeePublic, the leading global marketplaces for independent artists. The company recently informed that 2019 Annual General Meeting will be held on October 23, 2019 in order to discuss the financial statements and reports, remuneration report and other important agendas. RBL announced the launch of its sponsored Level 1 American Depositary Receipts Program. ADRs enable qualifying non-US companies to have direct exposure to the US investment community. RBL’sADRs would be trading under the symbol “RDBBY” as well as represent 1 ADR for every 10 ASX-traded RBL ordinary shares. The Group has appointed The Bank of New York Mellon as the nominated depositary bank.

Highlights of FY19 Financial Performance: The company’s FY19 financial performance demonstrated the core strengths as marketplace revenue of it went up by 41% to $257 million in FY19. During the year, gross profit soared up by 48% on FY18 to $95 million. The following picture provides an idea of the key numbers for FY 2019:


Financial Performance (Source: Company Reports)

What to Expect:The Redbubble Group is targeting a long-term growth on the back of a large addressable market and is prioritising the growth of customer base and increase loyalty through personal “creative adventures” and member experiences. The priorities also include building deeper relationships with the authentic artists by increasing their commercial success. Also, it is prioritising to persist in the current discipline in order to improve the group’s take rate, extract the maximum value from the marketing channels, as well as maintain the operating expenses and cash discipline. The strategic work would be supporting the company in reaching a milestone of $1 Bn in sales.
Stock Recommendation:The stock of RBL has witnessed a rise of 64.64% in the span of three months. As per the ASX, the stock is currently trading towards the 52-week high of $1.707. The company showed a CAGR of 44.15% in the revenue in the time span of FY15 to FY19 and 40.72% of CAGR in gross profit in the same time period. Considering the aforesaid points and decent outlook, we recommend a “Hold” rating on the stock at the current market price of A$1.460 per share, down 2.013% as on October 22, 2019.

Disclaimer
 
The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkine.com.au and associated pages are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation. Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product. The link to our Terms & Conditions has been provided please go through them and also have a read of the Financial Services Guide. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine Pty Ltd do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations.