Stocks’ Details

Aventus Retail Property Fund (ASX: AVN)

Strategic moves for progress: What is liked about the group is that it expects FY18 Funds from Operations (FFO) per unit to be 2 – 3 per cent higher than FY17 FFO per unit. The portfolio is also well positioned to capture the impacts of population and economic growth. AVN’s centres are strategically located in attractive catchment areas, with 92 per cent of the portfolio by value located in the high growth eastern states of Australia and mainly metropolitan locations. Further, the group has reduced its gearing to 36.9 per cent as at 31 December, within the target range of 30 – 40 per cent. Milford Asset Management Limited became the substantial holder of Aventus since 27 April 2018 by holding 25,653,057 securities and 5.196 per cent of the voting power. The Company announced the DRP issue price of $2.18 per unit for the period ended 31 March 2018. The DRP issue price is calculated by determining the Average Market Price for the Pricing Period from 3 May to 16 May 2018 as was notified in the ASX Notification of dividend/distribution on 23 March 2018, with no discount and DRP units will be distributed on 24 May 2018 and will rank equally with existing units. The Group maintains a disciplined approach to implement capital management to ensure greater diversity in debt providers and longer-dated debt. The $436 million acquisitions of Castle Hill and Marsden Park were settled during the half of FY18 and were smoothly integrated into the portfolio. The smaller centres of Shepparton and Tweed were sold at a 6.5 per cent premium to combined book value (30 June 2017), leading to an improvement in the quality of the portfolio, with the average centre value increasing to $93 million (an increase of 44 per cent since listing in October 2015).


Progress on FY18 Expiries (Source: Company Reports)

The stock declined by 11.93 per cent in last one year but witnessed a recovery of 3.85 per cent in last three months. The stock was marginally down in last five days. We give a “Speculative Buy” recommendation at the current market price of $2.16, given the long-term potential and growth scenario.
 

Eclipx Group Limited (ASX: ECX)

Rise in dividend: The stock advanced up by 4.82% on 18 May 2018 and is trading at a price that is well above its 52- week low price now. The recent rise in stock price is owing to the inside buying of shares by group’s directors through on-market trade. For instance, Gail Pemberton has acquired 30,125 fully paid ordinary shares and Garry McLennan has acquired 100,000 fully paid ordinary shares. However, Russell Shields disposed of 54,347 fully paid ordinary shares. The Group announced a 39 per cent increase in Net Operating Income (NOI) and Net Profit After Tax & Amortisation (NPATA) was up by 23 per cent for the half-year to 31 March 2018 and reaffirmed its full-year guidance. The Australia Commercial segment has contributed modestly to the Cash NPATA of the Group, but reported a net operating income before operating expenses after impairment of $61.5 million which was $2.7 million favourable to the amount reported for 2017. The New Zealand Commercial segment has contributed 11 per cent (2017: 17 per cent) to the Cash NPATA of the Group. The segment has reported a net operating income before operating expenses after impairment of $20.5 million which was $0.7 million unfavourable to the amount reported in 2017. Interim Dividend per share, fully franked was up by 7 per cent and amounted to 8.0c as compared to 2017. The Group remains committed to funding the facilities so that it can cater to its forecasted business growth.


Asset Growth (Source: Company Reports)

As at 31 March 2018, the Group had undrawn debt facilities of $288.0 million. GraysOnline delivered a pleasing result in the first half with the business now refocussed to target profitable channels and asset categories in Industrial and Auto. Total sales for Industrial and Auto increased by 13 per cent on a like for like basis. Margins were in line with its expectations and cost to income ratio was dropping as planned. The Group reaffirmed its full year guidance for 27 to 30 per cent growth in NPATA and 10 per cent to 12 per cent growth in Cash EPS. The stock price dropped by 21.8 per cent in last six months owing to negative sentiments creeping in with regards to growth prospects. The stock however, started rising up in last five days (up 5.40 per cent). By looking at the overall performance, we maintain a “Buy” recommendation at the current market price of $3.48.
 

Rural Funds Group (ASX: RFF)

Investigating new investment opportunities: Rural Funds Management Limited (RFM), as responsible entity and manager for the Rural Funds Group (RFF), entered into a contract to acquire Comanche, a 7,600 -hectare cattle property located in central Queensland at a purchase price of $15.7 million, which will be debt funded. RFF’s bank facility provides access to $50 million in funding above the current facility limit of $275 million. Settlement is expected in July 2018. RFM is well advanced in the process of arranging a lessee and will provide an update when this has been completed. The acquisition supports RFM’s strategy to acquire assets where productivity can be improved, with consequent increases in capital value and rental income. The acquisition of Natal was consistent with RFM’s strategy on sector expansion and climatic diversification. The cattle properties are expected to benefit from planned development capex aimed at improving carrying capacity. A similar development capex program was implemented on Rewan, a separate cattle property owned by RFF.


Adjusted Property Asset Movement (Source: Company Reports)

RFF has indicated that Adjusted funds from operations (AFFO) will be higher in the second half of FY18 following the Natal acquisition completed in December 2017, as well as revenue from the sale of the annual allocation attaching to high-security water rights held by RFF. RFF reaffirmed FY18 AFFO and distribution forecasts of 12.7 cents per unit (cpu) and 10.03 cpu, respectively.  The stock was up by 13.74 per cent in one year, followed by a drop of 7.8 per cent in last one month. The stock climbed up by 5.97 per cent as on 18 May 2018. We give a “Hold” recommendation at the current market price of $2.13, given the run-up and future potential.

Disclaimer
 
The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkine.com.au and associated pages are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation. Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product. The link to our Terms & Conditions has been provided please go through them and also have a read of the Financial Services Guide. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine Pty Ltd do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations.