Stocks’ Details
 

Zenitas Healthcare Limited (ASX: ZNT)

Acquisitions progressing well: Zenitas is a small cap healthcare operator that provides primary care, allied care and home care. The Group continued to improve its performance including strengthening and automating back-office processes. Zenitas Healthcare Limited recently provided an update on the current business performance and the status of several acquisition opportunities. It has made substantial progress on its pipeline of acquisition opportunities since the Company’s capital raise in late 2017. Sale agreements are currently being negotiated to final form representing approximately $2.0 million in annualised EBITDA. ZNT expects to have executed binding agreements, committing the equity funds raised in November 2017, by the end of April 2018. It expects that the average multiple of EBITDA for acquisitions funded from this capital raise will be less than 5 times. The Group has entered into a binding agreement to acquire 100% of the business and assets of Padbury, a Perth based medical clinic with 12 GPs.

Zenitas Vision (Source: Company Reports)

The acquisition of Padbury reflects Zenitas’ first move into the Western Australian primary care market. In the coming months, it will look to further bolster its primary care footprint in this region. It entered into a binding agreement to acquire 100% of the business and assets of Orion, a disability services provider. The acquisition of Orion will enable Zenitas to further penetrate the WA home care market through a network of 50 carers. The Group reaffirmed the market guidance for FY18 and expects EBITDA to be in the range of $13m - $13.5m prior to material acquisitions. The settlement of the Agewell acquisition has provided Zenitas with a multi-modality mobile service offering to Residential Aged Care Facilities and Home Care clients, complementing Dimple’s current podiatry service offering. Since the start of the year, the stock price has been falling that is by 16 per cent and was down by 20.1 per cent in the past three months, as on 24 April 2018. Despite of the dip, the stock looks “Expensive” at the current market price of $ 0.990, given some concerns over the productivity losses, if any, relating to these small acquisitions and earnings post acquisition.
 

Joyce Corporation Limited (ASX: JYC)

Revenue drop for Bedshed Franchising: Joyce Corporation Limited is engaged in foam manufacturing and holds interests in Bedshed Franchising & Company Stores (Bedshed). The Group announced the 1HFY18 results and reported an increase of 21 per cent and 7 per cent in consolidated revenue ($47.37 million) and EBIT ($5.06 million) respectively. Net Cash provided by operating activities ($2.1 million) was up by 114 per cent as compared to 1HFY17. EPS for 1HFY18 was up by 12.2 per cent as compared to 1HFY17 and the group declared 5 cents as a fully franked ordinary dividend which was paid on 11 April 2018.


Segment Performance (Source: Company Reports)

Joyce Corporation looks to be in a dynamic growth stage and has mostly counter-cyclical business units with relatively low risk. However, revenue from Bedshed Franchising was down by 23 per cent as compared to H1FY17 revenue. One of its director Karen Maree Gadsby acquired 20,000 ordinary shares from the market for a consideration of $30,848.30. Percentage of Debt in the total capital employed increased from nil in 2016 to 24.5 per cent in 2017. The share price was down by 3.23 per cent in the past one month after a significant rise of 282% seen in last five years. The stock looks “Expensive” at the current market price of $ 1.500, given the trading levels and all segments yet to perform as per expectations.

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