Macquarie Atlas Roads Group (ASX: MQA)

MQA Details

Investment in Quality Infrastructure assets: MQA acquired an additional 4.86 per cent in APRR via MAF2 and now MQA’s total interest in APRR comes to 25 per cent. APRR recorded an increase of 5.3 per cent in net profit of 2017 over 2016, and this was driven by a higher revenue and net interest savings. APRR’s cash flows are used to repay the debts and are reinvested in the capital of the Company. Lately, S&P reaffirmed the Group’s underlying rating to BBB- on TRIP II with a Stable outlook. The group focuses on growing its distributions and enhancing the portfolio via Active Asset management and through Disciplined capital management. Its full year distribution guidance for 2018 increased to 24.0 cps which represents an increase of 20 per cent on the distribution paid in 2017. The Net Assets increased from $1,073 million in 2016 (31 December 16) to $2,162.1 in 2017 (31 December 17). The stock prices were up by 6.5 per cent in the past one month and have plunged by 8.4 per cent in last three months (as at March 26, 2018). We recommend to “Hold” the stock at the current price of $5.80, as the stock has growth prospects and can provide better returns in future.

Distribution Trend (Source: Company Reports)
 

Seven Group Holdings Limited (ASX: SVW)

SVW Details

Challenging media landscape: Seven Group lately issued 2.20 per cent of senior unsecured convertible notes (due in 2025) for the consideration of A$350,000,000; and has now settled the convertible bonds. The Group completed the acquisition of the remaining 53.3 per cent stake in Coates Hire for about $487 million and this provided an additional exposure to the Group. The underlying operating cash flow for the Group (1HFY18) was $154 million, which represents an underlying EBITDA cash conversion ratio of 58 cents, up by 10 cents from the prior corresponding period and reflects the contribution of Coates cash flow and as well as the investment in the working capital at WesTrac Australia. ROE for 2017 was 0.6 per cent, well below 2016 return of 6.7 per cent; and in 2017, Percentage of Debt in the Total Capital Employed was 36.9 per cent against 34.2 per cent in the prior year. While the group expects momentum from Coates and WesTrac to continue, the media segment is expected to get support from cost reduction initiatives. SVW stock traded ex-dividend on 26 March 2018, and the group will pay an interim dividend of 21 cents per share on 20 April 18. The stock prices climbed up by 50.63 per cent in the past six months (as at March 26, 2018) and looks “Expensive” at the current market price of $18.39, looking at the trading levels and the challenging media landscape with declining advertising revenue share.
 

Financial Performance (Source: Company Reports)

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