Caltex Australia Limited

 

CTX Details
 
Increased Sales of Premium Crude Oil Products:Caltex Australia Limited (ASX: CTX) is engaged in the purchase, processing, distribution, and marketing of petroleum products. Recently, the company responded to the media speculation of EG Group’s offer and confirmed that the company did not receive any proposal to acquire Caltex subsequent to the proposals from ATD referred to in Caltex’s previous announcement to the ASX on 26 November 2019. The company also highlighted that there is no assurance that any binding proposal will be made by any of the parties who have expressed potential interest.
 
Q3FY19 Operational Highlights for the Period ended 30 September 2019: CTX declared its quarterly highlights, wherein the company posted Refiner Margin (CRM) at US$10.53/bbl, improved from Q2FY19 margin of US$7.45/bbl while came lower than Q3FY18 margin of US$12.17bbl.The company reported CRM sales from production at 1,055 ML, lower than Q2FY19 and Q3FY18 values of 1,373ML and 1,410ML, respectively, due to planned turnaround and inspection (T&I) programs occurred during July and August 2019. The quarter witnessed a rise in crude oil premiums products, indicating increased sweet crude demand, representing the higher-margin conditions. Landed crude premium during H1FY19 came in at US$5.50/bbl and the CRM result during Q3FY19 saw an increase of US$0.83/bbl in landed crude premium as compared to H1FY19.
 

Q3FY19 Operational Highlights (Source: Company Reports)
 
Guidance: As per FY19 guidance, the business expects RCOP (replacement cost of sales operating profit) NPAT at $320 million to $360 million, while RCOP EBIT is anticipated between $580 million to $620 million. Convenience Retail EBIT is expected within the range of $190 million to $210 million while EBIT from Lytton is expected within $75 million to $85 million, reflecting improved performance in H2FY19.
 
Valuation Methodology: Price to Earnings Multiple Approach

 Price to Earnings Based Valuation (Source: Thomson Reuters)

Note: All forecasted figures and peers have been taken from Thomson Reuters, NTM-Next Twelve Months
 
Stock Recommendation: The stock of CTX is quoting at $35.560, with a market capitalization of $8.89 billion. The stock is quoting at the upper band of its 52-week trading range of $20.520 and $35.960. The stock has generated stellar returns of 35.14% and 39.70% in the last three months and six months, respectively. Recent retail network review has allowed CTX to focus on the sites that are best aligned with the Convenience Retail strategy while the company is satisfied with the solid result delivered along with the divestment coming at a time of attractive valuations for quality freehold property assets. Considering the above factors, we have valued the stock using one relative valuation method, i.e., Price to Earnings multiple and arrived at a target price with a lower single-digit downside (in % terms). For the above valuation, we have taken the peer group – Viva Energy Group Ltd (ASX: VEA), Woodside Petroleum Ltd (ASX: WPL), Santos Ltd (ASX: STO), etc.  Hence, we give an “Expensive” rating on the stock at the current market price of $35.560 per share, down 0.14% as on 15 January 2020.
 
 
CTX Daily Price Chart (Source: Thomson Reuters)
 

Perpetual Limited

PPT Details
 
Funds Under Management Improved on q-o-q basis:Perpetual Limited (ASX: PPT) provides financial services like operating in funds management, financial advisory and trustee services. On 15 January 2020, the company reported that it has decreased its voting power from 8.34% to 7.31% in Medibank Private Limited.

Q2FY20 Highlights for the Period ended 31 December 2019: PPT announced its quarterly highlights, wherein the company reported funds under management (FUM) at $26.3 billion, depicting an increase of $0.2 billion from Q1FY20, driven by net inflows into cash and fixed income, offset by net outflows from Australian equities primarily from the intermediary and institutional channel. Total average FUM for the quarter ended on 31 December 2019 stood at $25.9 billion. During the quarter, the company reported Distribution payments to clients of $0.1 billion. The company reported FUM of $15.4 billion from Australian Equities and $1.3 billion from Global Equities as on 31 December 2019.


Q2FY20 Operational Highlights (Source: Company Reports)

Valuation Methodology: Price to Book Value Multiple Approach

Price to Book Value Based Valuation (Source: Thomson Reuters)

Note: All forecasted figures and peers have been taken from Thomson Reuters, NTM-Next Twelve Months

Stock Recommendation: The stock of PPT is quoting at $42.720, with a market capitalization of $1.99 million. The stock is quoting at the upper band of its 52-week trading range of $31.280 and $44.990. The stock has generated stellar returns of 25.84% and 31.55% in the last three months and one year, respectively. Despite fund outflow from the primary segment, i.e., Australian equities, the business witnessed FUM growth on q-o-q basis on account of growth from cash & fixed income segment. Considering the above factors, we have valued the stock using one relative valuation method, i.e., price to book value multiple and arrived at a target price with a higher single-digit downside (in % terms). For the above valuation, we have taken the peer group – Pendal Group Ltd (ASX: PDL), Challenger Ltd (ASX: CGF), Janus Henderson Group PLC (ASX: JHG), etc.  Hence, we give an “Expensive” rating on the stock at the current market price of $42.720 per share, up by 0.352% as on 15 January 2020.

 
PPT Daily Price Chart (Source: Thomson Reuters)

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