Stocks’ Details

Domino's Pizza Enterprises Limited

Downgraded SSS Guidance for ANZ Region: Based on positive market sentiments, the stock price of Domino's Pizza Enterprises Limited (ASX: DMP) rallied over 6.46 per cent on June 01, 2018 leading to a total rally of over 15.75 per cent in the past one month alone. Though there was no news from the company. The group recently reinitiated its popular puff pastry in the menu to test the demand level after seeing decent demand from customers on social media. Moreover, we expect that the forthcoming sport event i.e., FIFA world cup is probably going to help volume growth of the company in the upcoming period. It is expected that the second half of 2018 might be better in terms of performance while group’s Europe growth outlook is decent though challenges prevail at domestic front.
During the first half of the year, gearing ratio scaled up due to the combined impact of share buy-back event ($87.1M) and recent acquisition with Japan MI. As a result of this, net debt stood at $373.0 Mn in 1HFY18 as compared to previous corresponding period, up by 45.3% on YoY basis. However, RoE has improved in 1HFY18 because of share buy-back event, strong profit growth and additional profit contribution from the recent acquisition, funded by low interest-bearing debt. But, return on capital employed (RoCE) has marginally decreased to 19.2% in 1HFY18 from 19.5% in 1HFY17 due to a strategic acquisition. Further, the group has downgraded its Same Store Sales (SSS) guidance for ANZ region in the range of 6% to 8% (down from 7% to 9%) due to softening of its product prices in the region. DMP share price climbed up 22.92 per cent in the past three months (as at May 31, 2018) and is trading at nearly 52-week high level ($60.190). Hence, we continue to maintain our “Expensive” recommendation on the stock at the current market price of $52.410, while we wait for a significant dip as an entry opportunity.


Key Performance Ratios (Source: Company Reports)
 

Steadfast Group Limited

FY18 Guidance Range Reaffirmed:Steadfast Group Limited’s (ASX: SDF) stock slightly edged up by 0.357 per cent on June 01, 2018 following the announcement of its new director’s appointment effective immediately. According to the release, the group has appointed Ms. Gai McGrath to the Board as a Director, effective from June 01, 2018. Recently, the group has presented its business prospects at the Macquarie Conference and highlighted its FY18 guidance. Following this, the group has reaffirmed FY18’s Underlying EBITDA and NPAT guidance, and these are expected to be in the range of $160 Mn-$170 Mn and $71.5 Mn-$77.5 Mn, respectively for the full year. On the other hand, the group has recorded solid growth in first half of the year which was mainly driven by organic and acquisition growth across the group. The Steadfast Network delivered gross written premium (GWP) of $2.6 billion, a growth of 8%, driven by price rises together with new brokers and authorized representatives joining the Network. The group expanded its steadfast network by adding 15 new brokers in 1HFY18 bringing the total of 376 across Australia, New Zealand, and Singapore. RoE improved from 3.3 per cent to 3.7 per cent in a span of six months. The stock price rose by 8.53 per cent in the past three months as at May 31, 2018. It might be interesting to wait and watch the full result announcement which will be revealed on 24 August 2018, and hence we give a ‘Hold” recommendation on the stock at the current market price of $ 2.810, considering strong fundamentals coupled with organic and inorganic growth.


EBITDA and NPAT trend (Source: Company Reports)

 
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