2 Small-cap Stocks to Retain – AXL and IMF

Stocks’ Details
 

Axsesstoday Ltd

Settlement of $200M Securitisation Warehouse Facility: Equipment funding solutions’ provider, Axsesstoday Ltd.’s (ASX: AXL) stock rose 0.94% on May 04, 2018. The company has recently announced the settlement of $200M Securitisation Warehouse Facility (SWF) to support the company’s rapid growth across the hospitality and transport segments. This settlement is an important milestone in the strategic plan of the company by further diversifying and optimising its funding structure to deliver enhanced long-term returns on equity. AXL has placed over $150 million in receivables into the SWF, which is expected to reduce funding costs, improve capital efficiency and underpin further market share gains. Further, SWF has a revolving term of 12 months and is comprised of $200m in senior bank funding provided by Macquarie, which is supplemented by subordinated mezzanine and equity notes held by AXL to provide stable backing to the SWF in its initial growth phase. As per AXL’s strategic plan, the company has refinanced its corporate debt facility limit from $175m to the targeted level of $65m, which reduced its reliance on bank loans. The SWF’s total funding capacity is approximately $280m and the company expects to build the balance to approximately $200m through new originations over the next six months as AXL’s market share expands in the core hospitality and transport segments. The reductions in equity capital requirements and funding costs are expected to deliver considerable long-term value to AXL shareholders. Moreover, AXL has upgraded the FY18 earnings guidance to $7.0m from $6.0m initial guidance. Meanwhile, AXL stock has risen 17.78% in three months as on May 03, 2018, and we give a “Hold” recommendation on the stock at the current price of $ 2.140.
 

IMF Bentham Ltd

Confidential conditional settlement of a case: IMF Bentham Ltd.’s (ASX: IMF) stock rose 2.88% on May 04, 2018. The company has recently announced the confidential conditional settlement of a case it has funded in Australia. IMF expects the revenue of approximately $2 million from this investment and profit of $0.2 million after capitalised expenses of $1.5 million, and capitalised overheads (but before tax) of approximately $0.3 million, after the satisfaction of the conditions. On the other hand, IMF decided to fund, on a conditional basis, a new matter, that will be financed through its Rest of the World funds and this entails a proposed class action by certain current and former shareholders of Brambles Limited (Brambles) against Brambles. At the end of April 2018, the group has also undertaken a new investment for the class action against AMP Ltd. The group now aims to derive growth from increased number of investment managers, new product offerings and its maturing offices.


Cases and Commitments as at April 16, 2018 (Source: Company Reports)
 
Meanwhile IMF stock has fallen 26.81% in three months as on May 03, 2018. As of now, we give a “Hold” recommendation on the stock at the current price of $ 2.500.

 
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