Super Retail Group Limited

SUL Details

Like for Like Sales Growth Across All Business:Super Retail Group Limited (ASX: SUL) is engaged in retailing of auto parts, sporting equipment, and apparel & other outdoor equipment.

Shareholding Update: The company recently updated that Mitsubishi UFJ Financial Group, Inc became a substantial shareholder of the company with the voting power of 6.90%. In another release on ASX, the company notified that Commonwealth Bank of Australia and its related bodies corporate ceased to be a substantial shareholder of the company since 2 August 2019.

FY19 Financial Results: During the 52 weeks period ended 29 June 2019, total group sales generated amounted to $2.71 billion, up 5.4% on the prior corresponding period. Net profit after tax attributable to owners was reported at $139.3 million. Group segment EBITDA during the year was reported at $314.7 million, up 7.0% on prior corresponding period.

Segment depreciation and amortisation was reported at $86.6 million, up 16.2% on pcp owing to investment in the Omni-retail model. Normalised net profit after tax stood at $152.5 million, increasing 5.0% on prior corresponding period. The company declared a fully-franked final dividend amounting to 28.5 cents per share making full year dividends of 50.0 cents per share. The following picture provides an idea of the company’s key numbers:


FY19 Financial Results (Source: Company Reports)

Trading Update 2019/20: For the first 6 weeks of 2019/20, the group’s largest three businesses are delivering positive like for like sales growth.BCF witnessed the growth of approximately 5%, followed by Supercheap Auto with an approximate growth rate of 3%. Growth from Rebel business was approximately 2%. In FY20, the company expects capital expenditure to be in the range of $85 million and $90 million.

Stock Recommendation: The company’s stock generated returns of 24.20% over a period of 6 months. In FY19, the company reported normalised EBITDA cash conversion of 94% that reflected its focus on working capital and inventory management for improving in-store availability of products. Strong cash flows during the period enabled the company to fund its growth initiatives and increase shareholder dividends. Currently, the stock is priced towards 52 weeks high level of $10.440 with PE multiple of 12.80x and an annual dividend yield of 5.53%. Hence, considering the above-stated factors and current trading levels, we give a “Hold” recommendation on the stock at the current market price of $9.750 per share (up 7.854% on 16 August 2019).


 
SUL Daily Technical Chart (Source: Thomson Reuters)
 
The Star Entertainment Group Limited

SGR Details

Strong Domestic Growth: The Star Entertainment Group Limited (ASX: SGR) is engaged in the business of gaming, hospitality, and entertainment.

Team Changes: In order to further enhance customer service and deliver cost benefits, the company recently announced a reorganisation of its business. The new structure will include the Gaming and Marketing centres of excellence. It was added that a third centre – Hospitality and Tourism – is also being established in order to enable the company to improve the capability, processes as well as decision-making.

The organisational review has resulted in streamlining of the executive team.Under this, the role of Chief Financial Officer became a consolidation of finance, strategy, investor relations and IT functions. The company introduced a Group Executive Operations role for the responsibility of group-wide operations at The Star Gold Coast, Treasury Brisbane and The Star Sydney. Chief Legal & Risk Officer’s role became a combination of legal, risk, regulatory and compliance functions. Group CFO, Chad Barton decided to step out of business, with Harry Theodore assuming the role on his departure.

Financial Highlights: During the year ended 30 June 2019, the company generated statutory net revenue amounting to $2,158 million, up 3.6% on pcp. Statutory EBITDA during the year stood at $553 million, up 14.1% in comparison to the previous year. The company generated statutory NPAT amounting to $198 million, that increased 33.7% on prior corresponding period. The following picture gives an idea of the company’s key financial numbers:


Key Financials (Source: Company Reports)

Capex Guidance: The company stated that FY21 capex is expected to be approximately $175 million, against the previously provided guidance range of $200 million - $250 million.

Stock Recommendation: The stock of the company generated negative returns of 12.90% and 17.32% over a period of 1 month and 3 months, respectively. The company is focusing on a growth strategy through capital efficient investments with JV partners intact. Furthermore, the recent reorganisation of the business is also expected to enhance business performance.  Currently, the stock is priced close to its 52-week low level of $3.560 with PE multiple of 17.55x and an annual dividend yield of 5.41%, indicating a decent opportunity for accumulation. Hence, we give a “Buy” recommendation on the stock at the current market price of $3.790 per share (up 5.866% on 16 August 2019).


SGR Daily Technical Chart (Source: Thomson Reuters) 

Disclaimer
 
The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkine.com.au and associated pages are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation. Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product. The link to our Terms & Conditions has been provided please go through them and also have a read of the Financial Services Guide. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine Pty Ltd do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations.