JB HI-FI Limited

Rise in Distribution: JB HI-FI Limited (ASX: JBH) has recently posted a decent set of FY18 results in which revenue grew by 21.8 per cent to $6,854.3 million as against $5628.0 million in last year. This strong growth has been achieved through a combination of the organic growth of the JB Hi-Fi business and the full year contribution of The Good Guys business in FY 18 (compared to approximately 7 months’ contribution in FY 17). EBIT increased 14.5% to $350.6 million in FY 18 as compared to last year. Resultantly, NPAT grew by 12.3 per cent and amounted to $ 233.2 Mn in FY18 as compared to the previous year. As a result, the Board of Directors declared fully franked final dividend of 46 cents per share for its shareholders and it will be payable on September 07, 2018 with the record date of August 24, 2018. This brings the total full year dividend to 132 cents per share, up 11.9% on the prior year, equating to a payout ratio of 65% of net profit after tax. Further, the Board currently believes a 65% dividend payout ratio appropriately balances the distribution of profit to shareholders and reinvestment of earnings for future growth.As of now, the stock traded at $25.590 (with dividend yield of 5.08%) and looks to be on an ‘Expensive’ side.


FY 18 Financial Highlights (Source: Company Reports)
 

WAM Research Limited

Strong Performance in FY18: WAM Research Limited (ASX: WAX) has recently reported strong FY18 performance wherein the company recorded revenue from ordinary activities of $32.42 Mn in FY18, exhibiting solid growth of 36.6 per cent on Y-O-Y basis. The operating profit before tax (PBT) amounted to $28.89 Mn while an operating profit after (PAT) tax stood at $21.6Mn for FY18. The operating profit for FY 18 was mainly driven by the strong performance of the investment portfolio. During the year, the investment portfolio returns increased by 14.5%, outperforming the S&P/ASX All Ordinaries Accumulation Index, which rose 13.7%. Importantly, the company has proven its investment strategy to achieve an investment portfolio return of 18.1% per annum since its change in investment strategy in 2010, which is 8.7% greater than the annual average return from the S&P/ASX All Ordinaries Accumulation Index. We expect that the company will continue to generate better investment return in the upcoming period despite short-term headwinds.


Fully franked dividends since inception (Source: Company Reports)
 
Based on the strong performance, the Board of Directors declared a fully franked final dividend of 4.75 cents per share (cps), bringing the total dividend of 9.5 cents per share for the full-year, up 5.6% on the prior year. It will be paid on October 26, 2018 with the record date of October 15, 2018.Since inception, WAM Research has paid 89.9 cents per share in fully franked dividends to shareholders. It indicates that the Board is committed to paying an increasing stream of fully franked dividends to shareholders, given the company has sufficient profit reserves and franking credits. Meanwhile, the stock has risen 14.14 per cent in the past three months as at August 22, 2018 and is trading at a reasonable PE level of 14.38x. Based on the aforesaid facts and trading level, we maintain our “Speculative Buy” recommendation on the stock at the current market price of $1.635.

 
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