Stocks’ Details

Reliance Worldwide Corporation Limited (ASX:RWC)

Successful Completion of John Guest acquisition - Reliance Worldwide Corporation Limited is an Australia-based company that designs, manufactures and supplies water flow and control products and solutions for use in behind the wall plumbing. The Company successfully completed the retail component of its 1 for 1.98 pro rata accelerated non?renounceable entitlement offer which was announced on 24 May 2018 and together with the  institutional component of the  Entitlement Offer, the total amount raised was approximately $1.1 billion. In the meanwhile, Commonwealth Bank of Australia ceased to be the substantial holder of the Group since 25 June 2018. Recently, few directors of the Company acquired Company’s shares like Russell Chenu, William Stuart Crosby and Ross Dobinson acquired 55,217 shares, 50,506 shares and 12,457 shares, respectively. The Company issued 36,915,132 shares at a consideration of $4.15 per new Share. The Group successfully completed the acquisition of all the issued shares of John Guest Holdings Limited on the terms which were announced on 24 May 2018. The group has significant exposure to the offshore currency, US particularly and growth is expected to be witnessed going forward given the acquisition moves. Earnings in the UK is another catalyst highlighted based on the John Guest acquisition.The stock is trading close to its 52-week high price ($5.99) and its current market price is $5.49 as on 10 July 2018. The stock looks touch expensive and can be avoided as of now and one can wait and watch the impact of the acquisition of John Guest with better buying opportunities.
 

RWC’s geographic, product and channel exposure before and after acquisition (Source: Company Reports)
 

Corporate Travel Management Limited (ASX:CTD)

Continues to win market share- Corporate Travel Management Limited is an Australia-based travel management company, which is engaged in the provision of travel services. The Company issued 85,627 ordinary shares at an issue price of $23.36  per share and the shares were issued in relation to the acquisition of SCT Travel Group Pty Ltd. The Company successfully completed the acquisition of SCT Travel Group Pty Ltd. ROE moved from 9.7 per cent in June 2017 to 7.7 per cent in December 2017 which is still above the industry median of 4.9 per cent.


Diversified Business (Source: Company Reports)

The group posted statutory EPS growth at CAGR of 34 per cent over FY 10-17. Based on the splendid growth over the period, the group has reaffirmed its FY18 Underlying EBITDA guidance, which is expected to be approximately $125 million for the full year, representing 27 per cent growth on prior corresponding period (pcp).The Group is planning an EBITDA growth of over 20 per cent in 2HFY18 with a good momentum in FY19. The stock has been rising up since it was listed on ASX (up by 539.84 per cent in 5 years as on 9 July 2018). We recommend to “Hold” the stock at the current market price of $27.60 by looking at the initiatives which Company is undertaking and the plan it has made to achieve its growth in FY2021 with efforts on increasing market share across the globe.


EBITDA Growth Overview (Source: Company Reports)

 
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