Pacific Smiles Group Limited

1H19 results to be declared on 21 Feb: Pacific smiles group limited (ASX: PSQ) has recently informed thatthey will be announcing the results for the first half of FY19 ending 31 December 2018 on the 21 February 2019. It expects to create EBITDA growth of 10% and patient fees growth of 10-15% in FY19 as compared to FY18.PSQ intends to open at least 10 new dental centres in FY19 of which 3 centres are already opened and 1 new sites has been committed. There is also a further 4 sites in lease negotiations.Over the past 11 years, the underlying EBITDA, patients fees, and numbers of centres of the company have grown at a CAGR of 17%, 15.2%, and 16.8%, respectively.


Growth track record (Source: Company Reports)

On the other hand, Pacific smiles group’s 2018 full year financial results entailed underlying EBITDA of $21.5 Mn and underlying NPAT of $9.3 Mn. The key driver of this performance was decent growth in patient fees and the number of centres during FY18. Based on the performance, the Board of Director declared a final dividend of 3.8 cents per share, fully franked, bringing the full year dividend to 6.1 cents per share which is within the pay-out guidance of 70-100% of NPAT. Further, the management targeted dividend payout ratio which remains unchanged at 70% to 100% of NPAT for FY19. Its RoE stood at 15.3% in FY18 which is higher than the peer group of 14.3%, representing the group efficiency to generate higher profit with the shareholders invested capital.

Meanwhile, the stock price was up by 8.40 percent in the past three months and up by 2.53 percent in the past five days as of February 13, 2019. The stock is trading slightly towards a 52-week higher level with PE multiple of 33.02x. Based on the foregoing and upcoming release of 1HFY19 earnings on 21 February, we give a “Hold” recommendation on the stock at the current market price of $1.420.
 

Smiles Inclusive Limited

Quarterly Cashflow Update:Smiles Inclusive Limited (ASX: SIL) is a micro-cap healthcare company with the market capitalization of $17.67 Mn as of 14 February 2019. The group operates a network of dental practices across Australia under the national brand, namely “Totally Smiles”. The headquarter of the company is situated in Queensland, Australia and it is being currently headed by Mr. Mike Timoney – the Chief Executive Officer (CEO) and the Founder.

Recently, the group announcedQuarterly cashflow update for the three months ending 31 December 2018 wherein it highlighted about cash flow report and business update. As per the release, its cash inflows from Q2 operating activities was reported to be at $12.7 Mn which was 9% up from Q1 inflows but $0.5 Mn below the expectations because of lower than expected trading volume incurred during the Christmas to New Year period. However, its net cash inflows for the quarter ended 31 December 2018 stood at $0.6 Mn, with cash at bank increasing from $0.4 Mn at 30 September 2018 to $1.0 Mn at 31 December 2018. The Company had available undrawn debt capacity of $17.8 million under its working capital and acquisition facilities. Additionally, for FY19, cash EBITDA is expected to be $5.0 million and NPAT of $2.3 million. Its debt-to-equity ratio reduce to 0.33x in FY18 from 0.80x in FY17.


FY19 Guidance (Source: Company Reports)

Meanwhile, the share price has fallen 68.88% in the past six months but up by 10.91% in the past one month (as at 13 February 2019). The stock is currently trading close to 52-week lower level. By looking at stock volatility and considering all positive parameters discounted at the current juncture, we have a watch view on the stock at the current market price of $0.305 and wait for the further catalyst.
 

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