Stocks’ Details

WAM Microcap Limited

Strong Investment Portfolio Return in August Month: WAM Microcap Limited (ASX: WMI) has recently released its strong investment performance of August month wherein WMI Investment Portfolio delivered a 5.4% return in one month (as of 31 August 2018) and was up by 2.9% as compared to S&P/ASX Small Ordinaries Accumulation Index return of 2.5%.Notable contributors to the portfolio were the Specialty Fashion Group, Jumbo Interactive, Infomedia, Acrow and QANTM Intellectual Property during the period. In the past one year, WMI Investment Portfolio delivered solid returns of 30.1% (as at 31 August 2018) against the benchmark return of 22.3%, which is really good performance. Since inception, WMI Investment Portfolio generated 30.8% returns per annum against the S&P/ASX Small Ordinaries Accumulation Index returns of 20.3% p.a. Moreover, the Group posted Net Tangible Assets (NTA) per share before tax of 139.18 cents as on August 31, 2018 while NTA per share after tax amounted to 133.49 cents. Based on the solid performance in FY18, the company has declared a fully franked final ordinary dividend of 2 cents per share (cps) and a special dividend of 2 cps, bringing the total dividend of 4 cents per share and it will be payable on October 26, 2018 with the record date of October 15, 2018. This summarized a total dividend payment of 6 cents per share for the full year.


Investment Performance (Source: Company Reports)

Wilson Asset Management Group ceased to be a substantial holder of Funtastic Limited since September 13, 2018. Moreover, Wilson Asset Management Group became the substantial holder of Cabcharge Australia Limited since September 24, 2018 by holding 5.03 percent of the voting power. Meanwhile, the share price has risen 3.86 percent in the past three months as of September 28, 2018 and is inching close to the 52-week high level. The 5.7% discount to 12-month high of $1.57 against the 16.1% premium to 12-month low of $1.275 suggests the stock continues to push for new highs.Hence, we maintain our “Speculative Buy” recommendation on the stock at the current market price of $1.470 by looking at the favourable investment outlook ahead.

Paragon Care Limited

Recent Acquisitions will Plot FY19 Growth Story:Paragon Care Limited (ASX: PGC) is a small-cap company with the market capitalization of over $220 Mn as of October 02, 2018. PGC is in the business of supplying medical equipment, medical devices, and consumable medical products to the health and aged care markets across Australia and New Zealand. Recently, the company posted encouraging numbers in FY18 wherein topline increased by 17% to $136.7 million whilst net profit grew 8% from a profit of $10.1 million in FY17. From the analysis front, the net margin came in at 8.0% in FY18 which is above the industry median of 3.7%. As a result, RoE and RoCE stood at 8.7% and 5.6%, respectively in FY18, representing sustainable growth and solid return for shareholders. At 30 June 2018, the Group had a cash reserve of $40.39 Mn as compared to the prior corresponding period of $18.55 Mn. On the working capital front, average receivable days and inventory days for FY18 came in at 88 days and 172 days, respectively which is higher than the prior corresponding period figures of 63 days and 114 days, equating higher cash conversion cycle (CCC) of 102 days in FY18. Based on decent performance in FY18, the Board of Directors has declared a fully franked final ordinary dividend of 2.0 cents per share (cps) and it will be payable on October 12, 2018 with the record date of September 17, 2018. This summarized a total dividend payment of 3.1 cents per share for the full year. Additionally, for FY 19, PGC expects revenue and EBITDA for the group to be around $260 Mn and $36 Mn, respectively at the back of full contribution from the FY18 acquisition. The company has consistently paid dividends to the investors with the 5 - year average yield of 3.49%.

 

Revenue and EBITDA Trend (Source: Company Reports)

Meanwhile, the share price has fallen 8.81% in the past three months (as at September 28, 2018) and trades at reasonable PE level of 13.52x. Based on foregoing and traded level, we maintain our “Speculative Buy” recommendation on the stock at the current market price of $0.730.
 

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