NAOS SMALL CAP OPPORTUNITIES COMPANY LIMITED

NAOS Small Cap Opportunities Company Limited (ASX:NSC) with a market cap of $128.4m, has reported a total number of portfolio holdings of 11 as on June 30, 2018. For October, the NSC Investment Portfolio fell by -7.61%, but it still outperformed the Benchmark Small Ordinaries Accumulation Index (XSOAI) by about 2%. During the month, the group declared 1Q FY19 fully franked dividend of 1.35 cents per share. Lately, the company also highlighted its FY18 financial metrics, amendment to the investment strategy and the prospects for FY19. As per the release, the company has posted an after-tax profit of $4.7m, fully franked dividends totaling to 5.5 cents per share, and 1.15% decrease in the management fee along with the director remuneration falling by 64% with overall cost reduction in FY18. Discount to net tangible assets (‘NTA’) has widened, posting pre-tax NTA at $0.95. The management has made announcement towards the dividend payment frequency from bi-annually to quarterly for FY19. Fundamentally, ROE showed significant improvement, recorded at 3% for FY18 in comparison to negative ROE for FY17 at 8%.

Concentrated portfolio to give suitable returns: Varied amendments were made to the already existing investment strategy, one such amendment was shift from resource and early stage companies to industry type companies, and a long term investment technique that will have holding period ranging from three to five years which will not only be able to stand against highly volatile scenario but will also hold 100% cash at times when no strong investment opportunity is sourced.

Technically, the scrip made “doji” pattern on the price charts in the month of October and wrapped the month at the levels of $0.92. In the month of November, the scrip after opening and making high of $0.92 showed downside move and has touched the lower levels of $0.76. At current juncture with no strong indication of wither side move, the scrip is good to “Watch” and wait till it breaks key support or resistance levels.

The market cap of NSC was recorded at $128.4m, with P/E of 27x and beta below 1.0x as on November 16. Significant drop in the share price has been noticed from the month of October that has widened NTA. With change in the portfolio construction and more focus on long term holdings that can sustain the volatile conditions and enhancement of portfolio returns, we have a wait and watch view on NSC at the current levels of $0.76 (up 3.4% on November 16, 2018) while it has a dividend yield of over 9%.
 

NAOS EMERGING OPPORTUNITIES COMPANY LIMITED

NAOS Emerging Opportunities Company Limited (ASX:NCC) with a market cap of $72.49m and holding 9 long positions in its portfolio as on November 15, 2018, posted return of 7.1% for the financial year ended on June 30, 2018. Shareholders grew by 13% as on June 30, 2018 providing stronger liquidity.

Outperformed relative to benchmark: Theinvestment portfolio returned almost –6.09% in the month of October, outperforming the small ordinaries accumulation index (XSOAI) taken as benchmark index which dropped by –9.6%. Performance since inception over a period of 5 years and 8 months recorded growth of +117.37% as compared to the benchmark which delivered returns of just +31.24% over the same period. With major companies that are part of NCC portfolio coming up with the trading updates during the month of October, reacted positively for the overall portfolio performance.

Technically the scrip is trading in channel and with indication of upside move from major indicators in positive territory, the scrip might show upside move once it breaks the channel.

The market cap of NCC was recorded at $72.49m, with P/E of 17.32x and beta below 1.0x as on November 16. Strong portfolio composition along with outperformance relative to the benchmark, looks interesting. We give a “Speculative Buy” recommendation on NCC at the current levels of $1.21 while it has a dividend yield of about 6%.
 
 

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.