Nanosonics Limited

NAN Witnessed a Rise in Revenues: Nanosonics Limited (ASX: NAN) happens to be an innovator when it comes to infection prevention. It possesses a unique disinfection device, automated trophon® EPR, which has helped in setting a new standard of care in ultrasound probe disinfection practices globally.


1HFY19 Profit & Loss Statement (Source: Company Reports)

The total revenue of the company stood at $40.7 million for H1FY19 as compared to $30.0 million in the previous corresponding period reflecting an increase of 36%.The company’s revenue mix demonstrates strong growth in consumables as installed base continues to grow. Its profit after income tax stood at $7.1 million compared with $2.2 million in PCP, an increase of 221.0% backed by higher revenues on a PCP basis.

What to Expect from NAN Moving Forward: With respect to Europe, the company anticipates robust growth in the UK to continue in FY 2019 and the sales in Germany would witness a rise because of new guidelines and introduction of trophon2. With respect to France, the company stated that new guidelines might come from the Ministry of Health in FY 2019.

The stock has generated a YTD return of 47.12% and it generated 20.29% return over the last one month.Additionally, trophon®2 has been successfully launched in North America, Europe and Australia in the August/September end. The company added that adoption of trophon®2 is growing. Hence, considering the aforesaid factors, we have a positive outlook on the company and, hence, we maintain our “Hold” rating on the stock at the current market price of $4.090 per share (down 4.215% on March 08, 2019).
 

Webjet Limited

Dip in EBITDA margin against prior corresponding period: Webjet Limited (ASX: WEB) is a leader in an online travel agency, with its operations in Australia and New Zealand. The company has recently announced a dividend distribution of AUD 0.085 per share on ordinary fully paid shares of the company. The payment date is 18 April 2019 while an ex-date and record date happen to be 20 March 2019 and 21 March 2019, respectively.

The company also recently announced that the voluntary escrow restrictions on 796,772 ordinary shares which were issued in part consideration for the acquisition of JAC Travel Group (Holdings) Limited will be lifted on 13 March 2019.

1HFY19 Operational Snapshot (Source: Company Reports)

The revenue went up by 12.0% to $74.1 million in 1HFY19 as compared to $66.3 million in the prior corresponding period.The EBITDA improved by 11.0% to $28.5 million in 1HFY19 as compared to $25.7 million in 1HFY18. However, the EBITDA margin is down by 36bps on prior corresponding period on the back of higher costs as these rose 13% - mostly from increased marketing spending.

Reduced FX volatility: Going forward, the revised hedging policy is expected to reduce FX volatility and the company expects minimal FX movements for 2H19. Also, the corporate costs going forward is expected to be approximately $15 million. This includes option costs, D&O insurance and other costs associated with supporting a growing global business.

On the price performance front, the stock has witnessed a rise of 44.38% on the YTD basis. Also, the company’s stock is trading slightly towards the 52-week higher level hinting that all the positives have been discounted in the current market price. On the valuation front, the company has a P/B ratio of 3.3x which is slightly higher than the industry median (hotel and entertainment services) of 2.0x which demonstrates that the stock is slightly overvalued. Currently, the stock traded at a higher PE multiple of 37.98x with EV/EBITDA multiple of 18.7x which are higher than the concerned industry median of 16.2x and 9.0x respectively, signaling overvalued position at the current juncture. Henceforth, we put our watch stance on the stock at the current market price of A$15.290 per share.   
 

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